Chapter 2 Notes

Chapter 2 Notes - -chronological-easy to trace...

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Chapter 2 Notes: The Recording Process -Income statement statement of retained earnings balance sheet statement of cash flows -The Recording Process 1) Determine what type of account is involved 2) Determine what is affected 3) Debit and credit transaction -Credit: right side -Debit: left side, increase assets, decrease liabilities -Debit and credit must be balanced after every transaction (double-entry system) -Normal balance should be on side that’s increasing -Journal Entry: date, account name, debit or credit -Journals: -disclose complete effects of transaction
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Unformatted text preview: -chronological-easy to trace errors-Posting: Journal Entry Ledger-General ledger contains all accounts by a company-Notes payable v. Accounts payable-Notes=formal note made-Unearned Revenue (liability)-service has not been performed yet so you owe a service (liability), ex: gift cards-Prepaid Insurance (asset)-common stock=contributed capital-Trial Balance: A list of accounts and their balances at a given time (debit should = credit!). Can still have errors but have the balances match up!...
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