Review for AC202

Review for AC202 - THEACCOUNTING INFORMATION SYSTEM 1...

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1 THE ACCOUNTING  THE ACCOUNTING  INFORMATION  INFORMATION  SYSTEM SYSTEM
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2 Transaction Analysis Transaction Analysis: Transaction Analysis:   the process of  the process of  identifying the specific effects of economic  identifying the specific effects of economic  events on the accounting equation. events on the accounting equation. Each transaction has a dual (double-sided)  Each transaction has a dual (double-sided)  effect on the accounting equation. effect on the accounting equation.
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3 The Accounting Information  System The system of: collecting and processing  transaction data and communicating financial  information to decision makers.
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4   Accounting Transactions. .. are economic events that  must be recorded in the  financial statements  because they affect assets liabilities  and/or stockholders’  equity.
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5 Transaction Analysis    Transaction Analysis   determines the  impact  of the   transaction on the  accounting equation. Assets = Liabilities +   Stockholders’ Equity
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6 ABC Company Balance Sheet January 16, 2003 Assets Current Assets Cash 3,925 $ Accounts receivable 75 Property, Plant & Equip. Tools & equipment 2,650 $ Less: Accum. depr.: tools & eq. 50 2,600 Truck 15,000 $ Accum. depr.: truck 250 14,750 Total assets 21,350 $ Liabilities & Stockholders' Equity Current Liabilities : Notes payable 13,000 $ Accounts payable 150 Total liabilities 13,150 $ Stockholders' equity: Capital stock 8,000 $ Retained earnings 200 Total stockholders' equity 8,200 Total liabilities & stockholders' equity 21,350 $
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7 Vagabond Travel Agency Balance Sheet December 31, 2002 Assets Liabilities & Owners' Equity Cash 22,500 $ Liabilities: Notes receivable 10,000 Notes payable 41,000 $ Accounts receivable 60,500 Accounts payable 36,000 Supplies 2,000 Salaries payable 3,000 Land 100,000 Total liabilities 80,000 $ Building 90,000 Owners' Equity: Office equipment 15,000 Capital stock 150,000 Retained earnings 70,000 Total 300,000 $ Total 300,000 $ Statement of Financial Position:   A Starting Point
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8 Vagabond Travel Agency Balance Sheet December 31, 2002 Assets Liabilities & Owners' Equity Cash 22,500 $ Liabilities: Notes receivable 10,000 Notes payable 41,000 $ Accounts receivable 60,500 Accounts payable 36,000 Supplies 2,000 Salaries payable 3,000 Land 100,000 Total liabilities 80,000 $ Building 90,000 Owners' Equity Office equipment 15,000 Capital stock 150,000 Retained earnings 70,000 Total 300,000 $ Total 300,000 $ Assets = Liabilities + Owners’ Equity $300,000 = $80,000 + $220,000 Assets = Liabilities + Owners’ Equity $300,000 = $80,000 + $220,000 The Accounting Equation
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9 Accounting Analysis. .. Analyze the effect of business  transactions on the basic  accounting equation: Assets = Liabilities + Stockholders’ Equity Must  always  balance.
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10 Transaction Analysis Transaction Analysis If an individual asset is increased, there  If an individual asset is increased, there  must be a corresponding: must be a corresponding:     Decrease in another asset,  Decrease in another asset,  or or     Increase in a specific liability,  Increase in a specific liability,  or or    
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Review for AC202 - THEACCOUNTING INFORMATION SYSTEM 1...

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