Accounting Chapter 2 Notes

Then we identify the account names affected by the

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Unformatted text preview: Information) from the Journal to the Ledger - Posting: Process of copying from the journal to the ledger Expanding The Rules of Debit and Credit: Revenues and Expenses - Assets normally have a debit balance, so assets are debit- balance accounts. Liabilities and equity have credit- balance accounts. - Stockholders’ Equity includes the following: • Common stock: Credit- Balance Account • Retained Earnings: Credit- Balance Account • Dividends: A debit- Balance Account • Revenue- A credit- Balance Account • Expenses: A Debit- Balance Account - An Account with a normal debit balance may occasionally have a credit balance. This indicates a negative amount of the item. For example, Cash will have a credit balance if the business overdraws its bank account. Also, the liability Accounts payable- a credit balance account- could have a debit balance if the company overpays its account payable - Normal Balance Tip: Assets, - Expenses, and Dividends: left Debit. - Liabilities, Equity, and Revenues: Right Credit Flow of Accounting Data from the Journal the Ledger Transactions is Source Documents Journalized Transaction Occur Transaction are Analyzed Are Prepared and Posted - A transaction occurs and is recorded on a source document. Then, we identify the account names affected by the transaction and determine whether the accounts increased or...
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This note was uploaded on 04/08/2014 for the course ECON 121 taught by Professor Ronald during the Spring '11 term at UMBC.

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