Fin Acct CH3 - Accounting Ch 3 i The Accounting Information...

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Accounting Ch 3 i. The Accounting Information System a. The system of collecting and processing transaction data and communicating financial information to decision makers is known as the accounting information system ii. Accounting Transactions a. Transactions are economic events tat require recording in the financial statements i. May be external or internal ii. Not all activities represent transactions iii. Each transaction has a dual effect on the accounting equation b. Transaction Analysis i. The process of identifying the specific effects of economic events on the accounting equation i. The Account a. Record of increases and decreases in a specific asset, liability, equity, revenue, or expense item b. An account can be illustrated in a T-Account for i. Debit = “left” ii. Credit = “right” ii. Debit and Credit Procedures a. Double-Entry accounting system i. Each transaction must affect two or more accounts to keep the basic accounting equation in balance ii.
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