Chapter Three

Chapter Three - Chapter Three Accounting information...

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Chapter Three Accounting information system: collects and processes transaction data and then disseminates the financial information to interested parties Basic Terminology Event: a happening of consequences. An event generally is the source or cause of changes in assets, liabilities, and equity. Events may be external or internal. Transaction: an external even involving a transfer or exchange between two or more entities Account: a systematic arrangement that shows the effect of transactions and other events on a specific element. Companies keep a separate account fo each asset, liability, revenue, and expense, and for capital. (T-Account( Real Accounts: permanent; asset, liability, and equity accounts that appear on the balance sheet Nominal Accounts: temporary revenue, expense, and dividend accounts that appear on the income statement. Companies close nominal accounts, but not real accounts Ledger: the book containing that accounts General Ledger: a collection of all the asset, liability, owners’ equity, revenue, and expense accounts Subsidiary Ledger: contains the detail related to a given general ledger account Journal: the “book of original entry” where the company initially records
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This note was uploaded on 11/09/2011 for the course PSY 1310 taught by Professor Brown during the Spring '07 term at Texas State.

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Chapter Three - Chapter Three Accounting information...

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