basics-of-accounting-information-processing

For the period ties into to the statement of retained

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Unformatted text preview: ing diagram. QUARTZ CORPORATION Income Statement For the Year Ending December 31, 20X9 Revenues Retained earnings - January 1, 20X9 S ervices to customers I nterest income Total revenues Expenses * * S alaries R ent O ther operating expenses Total expenses Net income Plus: Net income $750,000 15,000 QUARTZ CORPORATION Balance Sheet December 31, 20X9 QUARTZ CORPORATION Statement of Retained Earnings For the Year Ending December 31, 20X9 $400,000 Assets 115,000 C ash A ccounts receivable L and O ther assets $515,000 $765,000 Less: Dividends 35,000 Retained earnings - December 31, 20X9 $480,000 $192,000 248,000 450,000 10,000 Total assets $235,000 115,000 300,000 $900,000 L iabilities 650,000 S alaries payable A ccounts payable Total liabilities $115,000 $ 34,000 166,000 $200,000 Stockholders’ equity C apital stock R etained earnings Total stockholders’ equity Total liabilities and equity 5.7 Unlocking the Mystery of Articulation $220,000 480,000 700,000 $900,000 Please click the advert It seems almost magical that the final tie-in of retained earnings will exactly cause the balance sheet to 5.7 Unlocking the Mystery of Articulation balance. This is reflective of the brilliance of Pacioli’s model, and is indicative of why it has survived It seems almost magical that the final tie-in of retained earnings will exactly cause the balance sheet to for centuries. balance. This is reflective of the brilliance of Pacioli’s model, and is indicative of why it has survived for centuries. Find your next education here! Click here bookboon.com/blog/subsites/stafford Download free eBooks at bookboon.com 25 Basics of Accounting & Information Processing Information Processing Part 2 Information Processing Your goals for this “information processing” chapter are to learn about: Accounts, debits and credits. The journal. The general ledger. The trial balance. Computerized processing systems. T-Accounts. Download free eBooks at bookboon.com 26 Basics of Accounting & Information Processing Accounts, Debits, and Credits 6. Accounts, Debits, and Credits The previous chapter showed how transactions caused financial statement amounts to change. “Before” and “after” examples, etc. was used to develop the illustrations. Imagine if a real business tried to keep up with its affairs this way! Perhaps a giant chalk board could be set up in the accounting department. As transactions occurred, they would be called in to the department and the chalk board would be updated. Chaos would quickly rule. Even if the business could manage to figure out what its financial statements were supposed to contain, it probably could not systematically describe the transactions that produced those results. Obviously, a system is needed. Please click the advert It is imperative that a business develop a reliable accounting system to capture and summarize its voluminous transaction data. The system must be sufficient to fuel the preparation of the financial statements, and be...
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