ch03+Student - 3-1Chapter 3: Accounting Information...

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Unformatted text preview: 3-1Chapter 3: Accounting Information Systems3-2Identifying and recordingJournalizingPostingTrial balanceAdjusting entriesAdjusted trial balancePreparing financial statementsClosingPost-closing trial balanceReversing entriesAccounting Information SystemThe Accounting CycleFinancial Statements for MerchandisersBasic terminologyDebits and creditsAccounting equationFinancial statements and ownership structureIncome statementStatement of retained earningsBalance sheetClosing entriesThe Accounting Information System3-3uCollects and processes transaction data.uDisseminates the information to interested parties.Accounting Information SystemAccounting Information System(AIS)3-4The Accounting EquationRelationship among the assets, liabilities and stockholders equity of a business: LO 2 Explain double-entry rules.The equation must be in balance after every transaction. For every Debitthere must be a Credit.Illustration 3-33-5Ownership structure dictates the types of accounts that are part of the equity section.Proprietorship or PartnershipCorporationlCapital AccountlDrawing AccountlCommon StocklAdditional Paid-in CapitallDividends DeclaredlRetained EarningsFinancial Statements and Ownership StructureLO 2 Explain double-entry rules.3-6Financial Statements and Ownership StructureLO 2 Explain double-entry rules.Stockholders EquityBalance SheetStatement of Retained EarningsNet income or Net loss(Revenues less expenses)Income StatementDividendsRetained Earnings (Net income retained in business)Common Stock (Investment by stockholders)Illustration 3-43-7The Accounting CycleLO 3 Identify steps in the accounting cycle.Transactions1. Journalization6. Financial Statements7. Closing entries8. Post-closing trail balance9. Reversing entries3. Trial balance2. Posting5. Adjusted trial balance4. AdjustmentsWork SheetIllustration 3-63-8Identify and Recording TransactionsWhat to Record?FASB states, transactions and other events and circumstances that affect a business enterprise.LO 3 Identify steps in the accounting cycle.Types of Events:uExternal between a business and its environment. uInternal event occurring entirely within a business.3-9General Journal a chronological record of transactions. Journal Entriesare recorded in the journal. 1. JournalizingLO 4 Record transactions in journals, post to ledger accounts, and prepare a trial balance.September 1:Stockholders invested $15,000 cash in the corporation in exchange for shares of stock.Illustration 3-73-10Posting the process of transferring amounts from the journal to the ledger accounts. 2. PostingLO 4 Record transactions in journals, post to ledger accounts, and prepare a trial balance.Illustration 3-7Illustration 3-83-11Posting Transferring amounts from journal to ledger....
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This note was uploaded on 03/01/2012 for the course FIN 3154 taught by Professor Jceasterwood during the Spring '08 term at Virginia Tech.

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ch03+Student - 3-1Chapter 3: Accounting Information...

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