Ch 3 The Accounting Information System V2-1

Ch 3 The Accounting Information System V2-1 -...

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Ch.3  The Accounting  Information System 1
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2 The Accounting Information  System Accounting Information System Basic terminology Debits and credits Accounting equation Financial statements and ownership structure Using a Worksheet Adjustments entered Work sheet columns Preparing financial statements from a work sheet Closing entries Monthly statements, yearly closing Accounting Cycle Identifying and recording Journalizing Posting Trial balance Adjusting entries Adjusted trial balance Closing Post-closing trial balance Reversing entries The accounting cycle Appendix 3A- Using Reversing Entries Accruals Prepayments Summary of reversing entries
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3 Basic Terminology  Permanent accounts (or “real” accounts) Asset, liability, and equity accounts Appear on the balance sheet Permanent accounts are not closed at year end Temporary accounts (or “nominal” accounts) Revenue, expense, and dividend accounts Revenue and expenses are on the income statement; dividends are on the equity statement Temporary accounts are closed at year end
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4 Basic Terminology Adjusting entries Entries made at the end of an accounting period Brings all accounts up to date on an accrual accounting basis Ensures that revenue recognition principle are followed and that proper matching occurs Four classifications of adjusting entries: Prepayment Accruals 1. Prepaid expenses 2. Accrued revenues 3. Unearned revenues 4. Accrued expenses
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5 Basic Terminology Financial statements Final summaries of the accounting data for a specific time period Four statements: Balance Sheet - shows financial condition at a specific date Income Statement - measures the results of operations during a period of time
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This note was uploaded on 01/05/2012 for the course BACK 1ALL taught by Professor Mach during the Spring '11 term at Folsom Lake College.

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Ch 3 The Accounting Information System V2-1 -...

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