Hhtfa8e ch02 stud devry Accounting 212 FINANCIAL ACCOUNTING

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  • Hhtfa8e ch02 stud devry Accounting 212 FINANCIAL ACCOUNTING

    1. 1. Copyright ©2010 Pearson Education Inc. Publishing as Prentice Hall. 1
    2. 2. Copyright ©2010 Pearson Education Inc. Publishing as Prentice Hall. 2
    3. 3. Transaction AnalysisChapter 2 Copyright ©2010 Pearson Education Inc. Publishing as Prentice Hall. 3
    4. 4. Transactions• Events that have a financial impact on the business• Events that have two sides• Accounting records both sides of transactions Copyright ©2010 Pearson Education Inc. Publishing as Prentice Hall. 4
    5. 5. The Account Assets Liabilities Stockholders’ Equity Copyright ©2010 Pearson Education Inc. Publishing as Prentice Hall. 5
    6. 6. Assets Copyright ©2010 Pearson Education Inc. Publishing as Prentice Hall. 6
    7. 7. Liabilities Copyright ©2010 Pearson Education Inc. Publishing as Prentice Hall. 7
    8. 8. Stockholders’ Equity Copyright ©2010 Pearson Education Inc. Publishing as Prentice Hall. 8
    9. 9. Analyze transactions Copyright ©2010 Pearson Education Inc. Publishing as Prentice Hall. 9
    10. 10. Exercise 2-16A Assets Liabilities Type of Accounts Accounts Notes Stockholders EquityDate Cash receivable Supplies Land = payable payable + Equity Transaction 6-Mar 9-Mar 12-Mar 15-Mar 15-31 - - - - - - Copyright ©2010 Pearson Education Inc. Publishing as Prentice Hall. 10
    11. 11. Exercise 2-16A Assets Liabilities Type of Accounts Accounts Notes Stockholders EquityDate Cash receivable Supplies Land = payable payable + Equity Transaction 15-31 31-Mar 31-Mar 31-Mar - - - - - - - $80,600 $80,600 Copyright ©2010 Pearson Education Inc. Publishing as Prentice Hall. 11
    12. 12. Understand how accounting works Copyright ©2010 Pearson Education Inc. Publishing as Prentice Hall. 12
    13. 13. Double-Entry Accounting• Business transactions include two parts• Accounting based on a double-entry system Copyright ©2010 Pearson Education Inc. Publishing as Prentice Hall. 13
    14. 14. T-Account Account Title Left side Right side Debit Credit Copyright ©2010 Pearson Education Inc. Publishing as Prentice Hall. 14
    15. 15. Rules of Debit and Credit Stockholders’ Assets Liabilities EquityDebit Credit Debit Credit Debit Credit Copyright ©2010 Pearson Education Inc. Publishing as Prentice Hall. 15
    16. 16. Additional Stockholders’ EquityAccounts: Revenues & Expenses Liabilities Common stockAssets + Retained earnings Stockholders’ Stockholders’ Dividends Equity Equity + Revenues Expenses Copyright ©2010 Pearson Education Inc. Publishing as Prentice Hall. 16
    17. 17. Rules of Debit and Credit Stockholders’ Equity Assets Liabilities Common stock Retained earningsDebit Credit Debit Credit Debit Credit Debit Credit Revenue Debit Credit Dividends Expenses Debit Credit Debit Credit Copyright ©2010 Pearson Education Inc. Publishing as Prentice Hall. 17
    18. 18. Record transactions in the journal Copyright ©2010 Pearson Education Inc. Publishing as Prentice Hall. 18
    19. 19. The Journal• Chronological record of transactions• Three steps Copyright ©2010 Pearson Education Inc. Publishing as Prentice Hall. 19
    20. 20. Journal Entry JOURNALDate Accounts and explanation Debit CreditMay 1 Cash 50,000 Common stock 50,000 Issued common stock Copyright ©2010 Pearson Education Inc. Publishing as Prentice Hall. 20
    21. 21. The Ledger Individual asset accounts Individual equity accounts Individual liability accounts 21 Copyright ©2010 Pearson Education Inc. Publishing as Prentice Hall.
    22. 22. Posting JOURNALDate Accounts and explanation Debit CreditMay 1 Cash 50,000 Common stock 50,000 Issued common stock Cash Common stock Copyright ©2010 Pearson Education Inc. Publishing as Prentice Hall. 22
    23. 23. Flow of Accounting Data Copyright ©2010 Pearson Education Inc. Publishing as Prentice Hall. 23
    24. 24. Use a trial balance Copyright ©2010 Pearson Education Inc. Publishing as Prentice Hall. 24
    25. 25. Trial Balance• Lists all accounts with their balances• Assets listed first, then liabilities and stockholders’ equity• Shows that debits equal credits• Usually prepared at the end of the period Copyright ©2010 Pearson Education Inc. Publishing as Prentice Hall. 25
    26. 26. Analyzing Accounts Cash Beginning balance Cash receipts ? Ending balance Copyright ©2010 Pearson Education Inc. Publishing as Prentice Hall. 26
    27. 27. Analyzing Accounts Accounts receivable Beginning balance Sales on account ? Ending balance Copyright ©2010 Pearson Education Inc. Publishing as Prentice Hall. 27
    28. 28. Analyzing Accounts Accounts payable Beginning balance ? Purchases on account Ending balance Copyright ©2010 Pearson Education Inc. Publishing as Prentice Hall. 28
    29. 29. Correcting Accounting Errors Copyright ©2010 Pearson Education Inc. Publishing as Prentice Hall. 29
    30. 30. Chart of Accounts Balance Sheet AccountsAssets Liabilities Stockholders’ Equity101 Cash 201 Accts. payable 301 Common stock111 Accts. receivable 231 Notes payable 311 Dividends141 Office supplies 312 Retained earnings151 Office furniture Income Statement Accounts191 Land Revenues Expenses 401 Service revenue 501 Rent expense 502 Salary expense 503 Utilities expense Copyright ©2010 Pearson Education Inc. Publishing as Prentice Hall. 30
    31. 31. Normal Balances of Accounts Assets Liabilities Stockholders’ Equity overall Common stock Retained earnings Dividends Revenues Expenses Copyright ©2010 Pearson Education Inc. Publishing as Prentice Hall. 31
    32. 32. Analyze transactions using only T-Accounts Copyright ©2010 Pearson Education Inc. Publishing as Prentice Hall. 32
    33. 33. Using T-Accounts• Decisions often are made without a complete accounting system• T-Accounts allow managers to analyze transactions quickly Copyright ©2010 Pearson Education Inc. Publishing as Prentice Hall. 33
    34. 34. Short Exercise 2-13 Cash Computer Equipment $140,000 $100,000 Accounts Payable Common Stock $100,000 $140,000 Debits = ? Credits = ? Copyright ©2010 Pearson Education Inc. Publishing as Prentice Hall. 34
    35. 35. Copyright ©2010 Pearson Education Inc. Publishing as Prentice Hall. 35

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