module2_slides.pdf - 1 Financial Accounting Edition The...

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Dr. Yu Bai, Department of Accounting and Business Law Financial Accounting Edition The Accounting Cycle Module 2 1
Dr. Yu Bai, Department of Accounting and Business Law The Accounting Cycle: During the Period Part A LO2-1 Identify the basic steps in measuring external transactions. LO2-2 Analyze the impact of external transactions on the accounting equation. LO2-3 Assess whether the impact of external transactions results in a debit or credit to an account balance. LO2-4 Record transactions in a journal using debits and credits. LO2-5 Post transactions to the general ledger. LO2-6 Prepare a trial balance. 2
Dr. Yu Bai, Department of Accounting and Business Law 3 Step 1 • Use source documents to identify accounts affected by an external transaction. Step 2 • Analyze the impact of the transaction on the accounting equation . Step 3 • Assess whether the transaction results in a debit or credit to account balances. Step 4 • Record the transaction in a journal using debits and credits. Step 5 • Post the transaction to the general ledger . Step 6 • Prepare a trial balance . Steps in Measuring External Transactions
Dr. Yu Bai, Department of Accounting and Business Law Capturing Transactions in Accounts Account : Record of all transactions related to a particular item over a period of time. Asset accounts : Examples: Cash, Supplies, and Equipment Liability accounts : Examples: Accounts Payable, Salaries Payable, Utilities Payable, and Taxes Payable Stockholders’ equity accounts : Examples: Common Stock and Retained Earnings Chart of accounts : A list of all account names used to record transactions 4