CACC 100 CH03

CACC 100 CH03 - CACC100 CH03 ACCOUNTING TRANSACTIONS...

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CACC100 CH03 ACCOUNTING TRANSACTIONS Double-entry accounting system: A system that records the dual effect of each transaction in appropriate accounts Accounting information system The system that: 1. Collects and processes transaction data Accounting transaction occurs when assets, liabilities, or shareholder’s equity items change as a result of economic event 2. Communicates financial information to decision maker Analyzing Transactions Recall: Assets = Liabilities + Shareholder’s Equity = Liabilities + (Common Shares + Retained Earnings) = Liabilities + (Common Shares) + (Revenue – Expense – Dividend) Each transaction has a dual (double sided) effect on the equation because accounting equation must always balance Payments of expense that will benefit for more than one accounting period are identified as “prepaid expense” or “prepayments” (Ex: look under types of transaction (6) – insurance) Revenue Rules Cash is received for the service and: 1. Service has not yet been completed Record: Asset – Cash increase Liability – Unearned Service Revenue increase 2. Service has been completed Record: Asset – Cash increase Liability – Unearned Service Revenue increase Types of Transaction and the Account(s) it effects (1) Investment of Cash by shareholders Oct 2: Cash of $10,000 was invested in exchange for $10,000 of common shares’ from company X
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This note was uploaded on 03/27/2012 for the course ACC 100 taught by Professor Unknown during the Spring '08 term at Ryerson.

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CACC 100 CH03 - CACC100 CH03 ACCOUNTING TRANSACTIONS...

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