chap03.rev

chap03.rev - ,11thed Kieso,Weygandt,andWarfield...

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Chapter 3: The Accounting  Chapter 3: The Accounting  Information Systems Information Systems Intermediate Accounting, 11th ed. Kieso, Weygandt, and Warfield Prepared by  Jep Robertson New Mexico State University
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Accounting data is represented by the  following relationship among the assets,  liabilities and owners’ equity of a  business:   Assets = Liabilities + Owners’ Equity The equation must be in balance after  every  recorded transaction in the  system. The Basic Accounting Equation The Basic Accounting Equation
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Accounting information is based on the  double entry system . An  account   is an arrangement of transactions  affecting a given asset, liability or other  element. Under this system, the  two-sided effect  of a  transaction is recorded in the appropriate  accounts. The recording is done by means of a  “debit- credit” convention  (set of rules) applying to all  accounts.  The Double Entry System The Double Entry System
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The system records the  two-sided  effect  of transactions         Transaction               Two-sided effect Bought furniture for cash             Decrease in  one  asset     Increase in  another  asset Took a loan in cash               Increase in an asset     Increase in a liability The Double Entry System The Double Entry System
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This note was uploaded on 02/09/2012 for the course ACCT 3112 taught by Professor Jokoehn during the Fall '10 term at UCM.

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chap03.rev - ,11thed Kieso,Weygandt,andWarfield...

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