NetSolutions records business transactions using double-entry accounting. Transactions include Chris Clark investing $25,000 cash in the business, purchasing $20,000 of land, buying $1,350 of supplies on account, earning $7,500 in fees, paying $3,650 in expenses, paying $950 to creditors, using $800 of supplies, and Chris Clark withdrawing $2,000 cash. Debits and credits are equal for each transaction to maintain the accounting equation of assets = liabilities + owner's equity.
1) The document discusses the accounting process and how to analyze and record business transactions. It explains the key steps which include examining source documents, analyzing transactions using debits and credits, recording transactions in a journal, posting to ledgers, and preparing a trial balance.
2) An example transaction is provided to demonstrate how to apply the accounting equation to identify impacts on asset, liability and equity accounts and how to record the journal entry and post to ledger accounts.
3) The revenue recognition principle is explained as recognizing revenue when it is earned rather than when payment is received. An example transaction illustrates revenue being recognized with a receivable recorded before cash is received.
The accounting cycle is the process by which accountants prepare financial statements for an entity over a period of time. It involves analyzing transactions, journalizing them, posting to ledger accounts, adjusting entries, preparing a trial balance and financial statements, and closing entries. Key steps include journalizing, posting, preparing a trial balance, adjusting entries, and financial statements.
The document provides an overview of the accounting recording process. It discusses key concepts like accounts, debits and credits, journals, ledgers, and the steps involved in recording transactions. Specifically, it covers:
- What accounts are and how they are used to record increases and decreases in assets, liabilities, and equity.
- How transactions are initially recorded in journals before being transferred to ledger accounts.
- The purpose of ledgers and how they contain all asset, liability, and equity accounts.
- The basic steps of analyzing transactions, journalizing them, and then posting to ledger accounts.
So in summary, the document outlines the fundamental components and process of recording business transactions in accounting from
The document discusses key accounting concepts such as debits and credits, T-accounts, the general journal, posting journal entries to ledger accounts, and preparing a trial balance. It provides examples of analyzing business transactions and recording debits and credits to the appropriate accounts. It also explains how a trial balance is used to prove the equality of total debits and credits after journal entries have been posted to ledger accounts.
Accounting Cycle - Ledgers - Capturing accounting eventFaHaD .H. NooR
What is a general ledger account?
A general ledger account is an account or record used to sort and store balance sheet and income statement transactions. Examples of general ledger accounts include the asset accounts such as Cash, Accounts Receivable, Inventory, Investments, Land, and Equipment. Examples of the general ledger liability accounts include Notes Payable, Accounts Payable, Accrued Expenses Payable, and Customer Deposits. Examples of income statement accounts found in the general ledger include Sales, Service Fee Revenues, Salaries Expense, Rent Expense, Advertising Expense, Interest Expense, and Loss on Disposal of Assets.
Some general ledger accounts are summary records which are referred to as control accounts. The detail that supports each of the control accounts will be found outside of the general ledger in what is known as a subsidiary ledger. For example, Accounts Receivable could be a control account in the general ledger, and there will be a subsidiary ledger which contains each customer's credit activity. The general ledger accounts Inventory, Equipment, and Accounts Payable could also be control accounts and for each there will be a subsidiary ledger containing the supporting detail.
This document discusses the accounting cycle and key accounting documents and processes. It covers source documents like invoices and receipts, accounting journals that record transactions chronologically, T-accounts that make up the general ledger, balancing T-accounts, the trial balance process, and the four main financial statements: the income statement, statement of owner's equity, balance sheet, and statement of cash flows.
This document provides an overview of basic accounting mechanics including journals, ledgers, debits and credits, types of accounts, rules of debit and credit, the conceptual framework of financial accounting, and the processes of journalizing and ledger posting. It explains that debits represent outflows and credits represent inflows, and describes the three types of accounts - personal, real, and nominal - and the rules for debiting and crediting each type. It also outlines the key steps and purposes of journals, ledgers, trial balances, profit and loss statements, and balance sheets.
1) The document discusses the accounting process and how to analyze and record business transactions. It explains the key steps which include examining source documents, analyzing transactions using debits and credits, recording transactions in a journal, posting to ledgers, and preparing a trial balance.
2) An example transaction is provided to demonstrate how to apply the accounting equation to identify impacts on asset, liability and equity accounts and how to record the journal entry and post to ledger accounts.
3) The revenue recognition principle is explained as recognizing revenue when it is earned rather than when payment is received. An example transaction illustrates revenue being recognized with a receivable recorded before cash is received.
The accounting cycle is the process by which accountants prepare financial statements for an entity over a period of time. It involves analyzing transactions, journalizing them, posting to ledger accounts, adjusting entries, preparing a trial balance and financial statements, and closing entries. Key steps include journalizing, posting, preparing a trial balance, adjusting entries, and financial statements.
The document provides an overview of the accounting recording process. It discusses key concepts like accounts, debits and credits, journals, ledgers, and the steps involved in recording transactions. Specifically, it covers:
- What accounts are and how they are used to record increases and decreases in assets, liabilities, and equity.
- How transactions are initially recorded in journals before being transferred to ledger accounts.
- The purpose of ledgers and how they contain all asset, liability, and equity accounts.
- The basic steps of analyzing transactions, journalizing them, and then posting to ledger accounts.
So in summary, the document outlines the fundamental components and process of recording business transactions in accounting from
The document discusses key accounting concepts such as debits and credits, T-accounts, the general journal, posting journal entries to ledger accounts, and preparing a trial balance. It provides examples of analyzing business transactions and recording debits and credits to the appropriate accounts. It also explains how a trial balance is used to prove the equality of total debits and credits after journal entries have been posted to ledger accounts.
Accounting Cycle - Ledgers - Capturing accounting eventFaHaD .H. NooR
What is a general ledger account?
A general ledger account is an account or record used to sort and store balance sheet and income statement transactions. Examples of general ledger accounts include the asset accounts such as Cash, Accounts Receivable, Inventory, Investments, Land, and Equipment. Examples of the general ledger liability accounts include Notes Payable, Accounts Payable, Accrued Expenses Payable, and Customer Deposits. Examples of income statement accounts found in the general ledger include Sales, Service Fee Revenues, Salaries Expense, Rent Expense, Advertising Expense, Interest Expense, and Loss on Disposal of Assets.
Some general ledger accounts are summary records which are referred to as control accounts. The detail that supports each of the control accounts will be found outside of the general ledger in what is known as a subsidiary ledger. For example, Accounts Receivable could be a control account in the general ledger, and there will be a subsidiary ledger which contains each customer's credit activity. The general ledger accounts Inventory, Equipment, and Accounts Payable could also be control accounts and for each there will be a subsidiary ledger containing the supporting detail.
This document discusses the accounting cycle and key accounting documents and processes. It covers source documents like invoices and receipts, accounting journals that record transactions chronologically, T-accounts that make up the general ledger, balancing T-accounts, the trial balance process, and the four main financial statements: the income statement, statement of owner's equity, balance sheet, and statement of cash flows.
This document provides an overview of basic accounting mechanics including journals, ledgers, debits and credits, types of accounts, rules of debit and credit, the conceptual framework of financial accounting, and the processes of journalizing and ledger posting. It explains that debits represent outflows and credits represent inflows, and describes the three types of accounts - personal, real, and nominal - and the rules for debiting and crediting each type. It also outlines the key steps and purposes of journals, ledgers, trial balances, profit and loss statements, and balance sheets.
The document outlines the basic rules and concepts of accounting. It discusses how debit and credit entries are made in ledger accounts, with debits on the left side and credits on the right. It also summarizes the fundamental accounting equation that assets must equal liabilities plus equity, and explains how transactions are recorded using debit and credit rules to maintain this equality. Financial statements like the balance sheet and income statement are prepared using the ledger accounts to assess a business's performance and financial position.
ACCOUNTING PRINCIPLES 1. Which of the following is not a core financial statement?
a. The Income Statement
b. Statement of Cash Flows
c. The Trial Balance
d. The Balance Sheet
2. The income statement, which presents the results of operations, can be prepared in many forms including:
a. Single Step Income Statement
b. Condensed Income Statement
c. Common Sized Income Statement
d. All of the above
3. Which of the following account types increase by debits in double-entry accounting?
a. Assets, Expenses, Losses
b. Assets, Revenue, Gains
c. Expenses, Liabilities, Losses
d. Gains, Expenses, Liabilities
4. Which of the following is true?
a. Accounts receivable are found in the current asset section of a balance sheet.
b. Accounts receivable increase by credits.
c. Accounts receivable are generated when a customer makes payments.
d. Accounts receivable become more valuable over time.
5. A company that uses the cash basis of accounting will:
a. Record revenue when it is collected.
b. Record revenue when it is earned.
c. Record revenue at the same time as accounts receivable.
d. Record bad debt expense on the income statement.
6. What are the main sections on a balance sheet?
a. Assets, liabilities, income
b. Assets, liabilities, equity
c. Assets, liabilities, expenses
d. Assets, gains, revenue
7. How are a company’s financial statements used?
a. For internal analysis
b. For external negotiation
c. For compliance
d. All of the above
8. Which of the following scenarios increases accounts payable?
a. A customer fails to pay an invoice.
b. A supplier delivers raw materials on credit.
c. Office supplies are purchased with cash.
d. None of the above
9. Which of the following must a certified public accountant (CPA) have in-depth knowledge of to pass the CPA licensing exam? (Check all that apply.)
a. Accounting software packages
b. Auditing
c. Derivatives
d. International banking laws
10. What is the result of the following transaction for Company A? Company A’s customer is unable to pay for a previous credit sale in accordance with Company A’s 90-day payment terms. The customer makes a promissory note to Company A that extends payment over a 24-month term including 5% interest.
a. No result because the customer didn’t pay.
b. Accounts receivable increases because of the interest.
c. A note receivable is recorded in non-current assets.
d. Company A records the loan as a liability.
11. When are liabilities recorded under the accrual basis of accounting?
a. When incurred
b. When paid
c. At the end of the fiscal year
d. When bank accounts are reconciled
12. Which is true about time in accounting?
a. Current liabilities are debts payable within 2 years.
b. Balance sheets reflect a company’s financial position at a certain point in time.
c. The time value of money is a finance concept, not relevant in accounting.
d. Accounts receivable are more easily collected as time passes.
13. When a company purchases property, plant, and equipment, how is it reflected on the
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The document discusses key concepts in accounting including the balance sheet, elements of financial statements, qualitative characteristics of financial reporting, and accounting assumptions and principles. It covers the objective of financial reporting to provide useful information to external users, and defines common balance sheet accounts and elements like assets, liabilities, equity, revenues and expenses. It also discusses how accounting tracks changes through journal entries and T-accounts to maintain the balance sheet equation of Assets = Liabilities + Equity.
Accounting involves recording financial transactions and preparing financial statements. It uses concepts like duality, accrual, matching and consistency. Transactions are recorded in journals like purchase, sales and cash books. The trial balance shows debit and credit balances of all accounts. The trading account calculates gross profit/loss and the profit and loss account calculates net profit/loss. The balance sheet presents the assets, liabilities and capital of a business at a point in time, with assets and liabilities ordered by liquidity or permanence. Adjustments to the trial balance ensure items are fully reflected in the final accounts.
The document summarizes accounting concepts related to the recording process. It discusses [1] accounts and how they are used to record transactions, [2] debits and credits and how they affect account balances, and [3] the basic steps in recording transactions, including journalizing, posting to ledgers, and preparing a trial balance.
Accounting Cycle - Journals - Capturing accounting eventFaHaD .H. NooR
What is the accounting cycle?
The accounting cycle is often described as a process that includes the following steps: identifying, collecting and analyzing documents and transactions, recording the transactions in journals, posting the journalized amounts to accounts in the general and subsidiary ledgers, preparing an unadjusted trial balance, perhaps preparing a worksheet, determining and recording adjusting entries, preparing an adjusted trial balance, preparing the financial statements, recording and posting closing entries, preparing a post-closing trial balance, and perhaps recording reversing entries.
Cycle and steps seem to be a carryover from the days of manual bookkeeping and accounting when transactions were first written into journals. In a separate step the amounts in the journal were posted to accounts. At the end of each month, the remaining steps had to take place in order to get the monthly, manually-prepared financial statements.
Today, most companies use accounting software that processes many of these steps simultaneously. The speed and accuracy of the software reduces the accountant's need for a worksheet containing the unadjusted trial balance, adjusting entries, and the adjusted trial balance. The accountant can enter the adjusting entries into the software and can obtain the complete financial statements by simply selecting the reports from a menu. After reviewing the financial statements, the accountant can make additional adjustments and almost immediately obtain the revised reports. The software will also prepare, record, and post the closing entries
This document discusses key concepts in double-entry bookkeeping including accounts, debits and credits, and the basic steps in the recording process. It explains that an account tracks increases and decreases in specific items, and can be represented using a T-account format. It defines debits and credits, explaining that every transaction must have an equal debit and credit to maintain the accounting equation. The basic steps in the recording process are to journalize transactions, post to ledger accounts, and prepare a trial balance.
The document discusses the accounting process and provides details about accounting concepts, principles, branches, books of accounts, accounting systems and rules of debit and credit. It defines accounting and discusses the accounting equation. It explains the different types of accounts, accounting process which involves recording transactions in journal, posting to ledger, preparing trial balance and final accounts. It provides examples of journal entries and trial balance.
The document provides an overview of the accounting process. It defines accounting and discusses its key principles and concepts. It describes the different branches and types of accounting. It then explains the accounting process which involves identifying transactions, preparing documents, recording transactions in a journal, posting to ledgers, preparing trial balances and final accounts such as profit and loss statements and balance sheets. It also discusses the different books of accounts used such as journals, ledgers and trial balances. Finally, it covers accounting systems and basics such as debits and credits, types of accounts and how to prepare and balance accounts.
The document provides an overview of Chapter 1 of an accounting fundamentals course. It includes:
1) An agenda that outlines the key topics to be covered in the chapter, including understanding accounting concepts and golden rules, preparing financial statements, maintaining subsidiary books, and depreciation.
2) Descriptions of the meaning and phases of the accounting cycle, accounting terminology, concepts, and the double entry system.
3) Explanations of personal, real, and nominal accounts and the golden rules for debiting and crediting each type.
4) Examples of journal entries, posting journal entries to ledgers, and the preparation and format of a trial balance.
5) An overview of key
The document discusses key concepts in accounting including the balance sheet, accounting equation, journal entries, T-accounts, and financial statements. It provides examples of analyzing transactions for a company called Papa John's Pizza and how the accounting equation stays balanced. The accounting cycle and process of tracking account balances through the general journal, general ledger, and financial statements is also summarized.
The document provides an introduction to accounting, including definitions, key concepts, and terminology. It discusses the three main branches of accounting: financial accounting, cost accounting, and management accounting. Financial accounting is designed to provide information to external users to help with decision making. Cost accounting helps management control costs, while management accounting provides information to help management make decisions and control activities. The document also outlines accounting concepts like the business entity concept, money measurement concept, and matching concept. It defines key terms like assets, liabilities, revenues, and expenses.
This document discusses key concepts for understanding a company's balance sheet, including the activities that cause changes and how specific activities affect balances. It covers the conceptual framework for financial reporting, including elements of financial statements, qualitative characteristics, and the objective of providing useful information to external users. Key aspects of the accounting cycle are also summarized, such as analyzing transactions, recording journal entries, and preparing financial statements.
Chapter 4 Intro To Chapter 4 And Debit And CreditAdjem
The document provides an introduction to accounting ledgers and T-accounts. It explains that an account tracks individual financial items and the ledger collects all accounts. It then demonstrates how to set up and use T-accounts to record opening balances and transactions, following debit and credit rules. Sample transactions are analyzed by recording effects to appropriate accounts.
The document discusses the accounting cycle and related concepts. It covers:
1) Analyzing transactions and their impact on the accounting equation (Assets = Liabilities + Equity). Transactions are recorded through journal entries.
2) Journal entries record transactions in chronological order and are posted to accounts in the general ledger.
3) A trial balance is prepared by listing account balances from the general ledger to check that total debits equal total credits. It helps identify any errors.
4) Technology has streamlined accounting processes but also introduces new risks around data security and reliability of systems.
The document discusses the accounting cycle and related concepts. It covers:
1) Analyzing transactions and determining their impact on the accounting equation (Assets = Liabilities + Equity). This is the first step in the accounting cycle.
2) Recording transactions in a journal, which provides a chronological record. This is the second step. Entries are then posted to accounts in the general ledger.
3) Preparing a trial balance to check that total debits equal total credits after posting. This is the third step.
ANALYZING TRANSACTIONS INTO DEBIT AND CREDIT PARTS.docxDanni79
This document discusses analyzing transactions into debit and credit parts. It begins by explaining the accounting equation and how T accounts represent the equation. It then discusses how to classify accounts as assets, liabilities, or equity and whether they normally have debit or credit balances. The document provides examples of various transactions and uses a set of questions to analyze how each transaction affects two accounts, determining which side of each account is debited or credited. It demonstrates analyzing transactions involving assets, liabilities, revenues, expenses, and payments on account. The goal is to show how to properly record transactions by determining the accounts affected and appropriate debit and credit entries.
This document provides an overview of accounting concepts including financing, investing, the accounting equation, debits and credits, T-accounts, and different types of accounts. It discusses how financing occurs on the right side of the accounting equation and represents sources of money, while investing occurs on the left side and represents the use of money. The key accounting equation assets = liabilities + owner's equity is also explained. Common account types are defined including assets, liabilities, owner's equity, revenues/gains, and expenses/losses. The document also demonstrates how transactions are recorded using debits and credits in T-accounts and journals.
Revenue management is a technique used to maximize profits by understanding basics like revenues, costs, and profits. It started in the late 1970s when the airline industry in the US was deregulated and American Airlines introduced a discounted pricing system based on flight demand. This concept expanded to hospitality and can now be applied to any product using dynamic pricing, inventory management, restrictions, and tracking customer and market data. Revenue management connects business data to concepts of demand, supply, pricing, and uses data analytics to leverage inventories at both the macro and micro levels.
The document provides an overview of accounting concepts and principles for an MBA course. It defines bookkeeping and accounting, explains the double-entry system of bookkeeping, and covers key accounting concepts like the accounting equation, revenue and expense recognition, and accounting conventions like materiality and consistency. It also provides examples of journal entries and how to record transactions in ledger accounts.
The document outlines the basic rules and concepts of accounting. It discusses how debit and credit entries are made in ledger accounts, with debits on the left side and credits on the right. It also summarizes the fundamental accounting equation that assets must equal liabilities plus equity, and explains how transactions are recorded using debit and credit rules to maintain this equality. Financial statements like the balance sheet and income statement are prepared using the ledger accounts to assess a business's performance and financial position.
ACCOUNTING PRINCIPLES 1. Which of the following is not a core financial statement?
a. The Income Statement
b. Statement of Cash Flows
c. The Trial Balance
d. The Balance Sheet
2. The income statement, which presents the results of operations, can be prepared in many forms including:
a. Single Step Income Statement
b. Condensed Income Statement
c. Common Sized Income Statement
d. All of the above
3. Which of the following account types increase by debits in double-entry accounting?
a. Assets, Expenses, Losses
b. Assets, Revenue, Gains
c. Expenses, Liabilities, Losses
d. Gains, Expenses, Liabilities
4. Which of the following is true?
a. Accounts receivable are found in the current asset section of a balance sheet.
b. Accounts receivable increase by credits.
c. Accounts receivable are generated when a customer makes payments.
d. Accounts receivable become more valuable over time.
5. A company that uses the cash basis of accounting will:
a. Record revenue when it is collected.
b. Record revenue when it is earned.
c. Record revenue at the same time as accounts receivable.
d. Record bad debt expense on the income statement.
6. What are the main sections on a balance sheet?
a. Assets, liabilities, income
b. Assets, liabilities, equity
c. Assets, liabilities, expenses
d. Assets, gains, revenue
7. How are a company’s financial statements used?
a. For internal analysis
b. For external negotiation
c. For compliance
d. All of the above
8. Which of the following scenarios increases accounts payable?
a. A customer fails to pay an invoice.
b. A supplier delivers raw materials on credit.
c. Office supplies are purchased with cash.
d. None of the above
9. Which of the following must a certified public accountant (CPA) have in-depth knowledge of to pass the CPA licensing exam? (Check all that apply.)
a. Accounting software packages
b. Auditing
c. Derivatives
d. International banking laws
10. What is the result of the following transaction for Company A? Company A’s customer is unable to pay for a previous credit sale in accordance with Company A’s 90-day payment terms. The customer makes a promissory note to Company A that extends payment over a 24-month term including 5% interest.
a. No result because the customer didn’t pay.
b. Accounts receivable increases because of the interest.
c. A note receivable is recorded in non-current assets.
d. Company A records the loan as a liability.
11. When are liabilities recorded under the accrual basis of accounting?
a. When incurred
b. When paid
c. At the end of the fiscal year
d. When bank accounts are reconciled
12. Which is true about time in accounting?
a. Current liabilities are debts payable within 2 years.
b. Balance sheets reflect a company’s financial position at a certain point in time.
c. The time value of money is a finance concept, not relevant in accounting.
d. Accounts receivable are more easily collected as time passes.
13. When a company purchases property, plant, and equipment, how is it reflected on the
CA NOTES ON ACCOUNTING PROCESS
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FREE AGREEMENTS AND CONTRACTS FORMATS
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FREE LLB LAW FIRST SEM NOTES
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FREE LLB LAW THIRD SEM NOTES
FREE LLB LAW FOURTH SEM NOTES
FREE LLB LAW FIFTH SEM NOTES
FREE LLB LAW SIXTH SEM NOTES
FREE CA ICWA FOUNDATION NOTES
FREE CA ICWA INTERMEDIATE NOTES
FREE CA ICWA FINAL NOTES
KANOON KE RAKHWALE INDIA
HIRE LAWYER ONLINE
LAW FIRMS IN DELHI
CA FIRM DELHI
VISIT : https://www.kanoonkerakhwale.com/
VISIT : https://hirelawyeronline.com/
The document discusses key concepts in accounting including the balance sheet, elements of financial statements, qualitative characteristics of financial reporting, and accounting assumptions and principles. It covers the objective of financial reporting to provide useful information to external users, and defines common balance sheet accounts and elements like assets, liabilities, equity, revenues and expenses. It also discusses how accounting tracks changes through journal entries and T-accounts to maintain the balance sheet equation of Assets = Liabilities + Equity.
Accounting involves recording financial transactions and preparing financial statements. It uses concepts like duality, accrual, matching and consistency. Transactions are recorded in journals like purchase, sales and cash books. The trial balance shows debit and credit balances of all accounts. The trading account calculates gross profit/loss and the profit and loss account calculates net profit/loss. The balance sheet presents the assets, liabilities and capital of a business at a point in time, with assets and liabilities ordered by liquidity or permanence. Adjustments to the trial balance ensure items are fully reflected in the final accounts.
The document summarizes accounting concepts related to the recording process. It discusses [1] accounts and how they are used to record transactions, [2] debits and credits and how they affect account balances, and [3] the basic steps in recording transactions, including journalizing, posting to ledgers, and preparing a trial balance.
Accounting Cycle - Journals - Capturing accounting eventFaHaD .H. NooR
What is the accounting cycle?
The accounting cycle is often described as a process that includes the following steps: identifying, collecting and analyzing documents and transactions, recording the transactions in journals, posting the journalized amounts to accounts in the general and subsidiary ledgers, preparing an unadjusted trial balance, perhaps preparing a worksheet, determining and recording adjusting entries, preparing an adjusted trial balance, preparing the financial statements, recording and posting closing entries, preparing a post-closing trial balance, and perhaps recording reversing entries.
Cycle and steps seem to be a carryover from the days of manual bookkeeping and accounting when transactions were first written into journals. In a separate step the amounts in the journal were posted to accounts. At the end of each month, the remaining steps had to take place in order to get the monthly, manually-prepared financial statements.
Today, most companies use accounting software that processes many of these steps simultaneously. The speed and accuracy of the software reduces the accountant's need for a worksheet containing the unadjusted trial balance, adjusting entries, and the adjusted trial balance. The accountant can enter the adjusting entries into the software and can obtain the complete financial statements by simply selecting the reports from a menu. After reviewing the financial statements, the accountant can make additional adjustments and almost immediately obtain the revised reports. The software will also prepare, record, and post the closing entries
This document discusses key concepts in double-entry bookkeeping including accounts, debits and credits, and the basic steps in the recording process. It explains that an account tracks increases and decreases in specific items, and can be represented using a T-account format. It defines debits and credits, explaining that every transaction must have an equal debit and credit to maintain the accounting equation. The basic steps in the recording process are to journalize transactions, post to ledger accounts, and prepare a trial balance.
The document discusses the accounting process and provides details about accounting concepts, principles, branches, books of accounts, accounting systems and rules of debit and credit. It defines accounting and discusses the accounting equation. It explains the different types of accounts, accounting process which involves recording transactions in journal, posting to ledger, preparing trial balance and final accounts. It provides examples of journal entries and trial balance.
The document provides an overview of the accounting process. It defines accounting and discusses its key principles and concepts. It describes the different branches and types of accounting. It then explains the accounting process which involves identifying transactions, preparing documents, recording transactions in a journal, posting to ledgers, preparing trial balances and final accounts such as profit and loss statements and balance sheets. It also discusses the different books of accounts used such as journals, ledgers and trial balances. Finally, it covers accounting systems and basics such as debits and credits, types of accounts and how to prepare and balance accounts.
The document provides an overview of Chapter 1 of an accounting fundamentals course. It includes:
1) An agenda that outlines the key topics to be covered in the chapter, including understanding accounting concepts and golden rules, preparing financial statements, maintaining subsidiary books, and depreciation.
2) Descriptions of the meaning and phases of the accounting cycle, accounting terminology, concepts, and the double entry system.
3) Explanations of personal, real, and nominal accounts and the golden rules for debiting and crediting each type.
4) Examples of journal entries, posting journal entries to ledgers, and the preparation and format of a trial balance.
5) An overview of key
The document discusses key concepts in accounting including the balance sheet, accounting equation, journal entries, T-accounts, and financial statements. It provides examples of analyzing transactions for a company called Papa John's Pizza and how the accounting equation stays balanced. The accounting cycle and process of tracking account balances through the general journal, general ledger, and financial statements is also summarized.
The document provides an introduction to accounting, including definitions, key concepts, and terminology. It discusses the three main branches of accounting: financial accounting, cost accounting, and management accounting. Financial accounting is designed to provide information to external users to help with decision making. Cost accounting helps management control costs, while management accounting provides information to help management make decisions and control activities. The document also outlines accounting concepts like the business entity concept, money measurement concept, and matching concept. It defines key terms like assets, liabilities, revenues, and expenses.
This document discusses key concepts for understanding a company's balance sheet, including the activities that cause changes and how specific activities affect balances. It covers the conceptual framework for financial reporting, including elements of financial statements, qualitative characteristics, and the objective of providing useful information to external users. Key aspects of the accounting cycle are also summarized, such as analyzing transactions, recording journal entries, and preparing financial statements.
Chapter 4 Intro To Chapter 4 And Debit And CreditAdjem
The document provides an introduction to accounting ledgers and T-accounts. It explains that an account tracks individual financial items and the ledger collects all accounts. It then demonstrates how to set up and use T-accounts to record opening balances and transactions, following debit and credit rules. Sample transactions are analyzed by recording effects to appropriate accounts.
The document discusses the accounting cycle and related concepts. It covers:
1) Analyzing transactions and their impact on the accounting equation (Assets = Liabilities + Equity). Transactions are recorded through journal entries.
2) Journal entries record transactions in chronological order and are posted to accounts in the general ledger.
3) A trial balance is prepared by listing account balances from the general ledger to check that total debits equal total credits. It helps identify any errors.
4) Technology has streamlined accounting processes but also introduces new risks around data security and reliability of systems.
The document discusses the accounting cycle and related concepts. It covers:
1) Analyzing transactions and determining their impact on the accounting equation (Assets = Liabilities + Equity). This is the first step in the accounting cycle.
2) Recording transactions in a journal, which provides a chronological record. This is the second step. Entries are then posted to accounts in the general ledger.
3) Preparing a trial balance to check that total debits equal total credits after posting. This is the third step.
ANALYZING TRANSACTIONS INTO DEBIT AND CREDIT PARTS.docxDanni79
This document discusses analyzing transactions into debit and credit parts. It begins by explaining the accounting equation and how T accounts represent the equation. It then discusses how to classify accounts as assets, liabilities, or equity and whether they normally have debit or credit balances. The document provides examples of various transactions and uses a set of questions to analyze how each transaction affects two accounts, determining which side of each account is debited or credited. It demonstrates analyzing transactions involving assets, liabilities, revenues, expenses, and payments on account. The goal is to show how to properly record transactions by determining the accounts affected and appropriate debit and credit entries.
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The document outlines 12 generally accepted accounting principles (GAAP) that are universally followed in accounting. These principles include: 1) money measurement, 2) separate entity, 3) duality, 4) going concern, 5) cost, 6) accounting period, 7) conservation, 8) realization, 9) accrual, 10) matching, 11) consistency, and 12) materiality. The principles provide guidelines for recording transactions, valuing assets and liabilities, preparing financial statements, and ensuring accuracy and consistency over time.
Accounting functions include systematically tracking, storing, recording, analyzing, summarizing and reporting a company's financial transactions. These accounting functions maintain a fiscal history that is accessible for audits.
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This document provides an introduction to cost accounting. It defines cost accounting as the process of identifying, measuring, accumulating, analyzing, preparing, interpreting, and communicating information to permit informed judgments and decisions by users of the information. It discusses the differences between cost accounting, financial accounting, and management accounting. Key aspects of cost accounting covered include objectives, scope, importance, limitations, and classifications of costs based on nature, variability, component, controllability, and managerial function. The document also provides examples to illustrate different types of costs.
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Here is a draft order letter to National Paints Co. Ltd. from Color World:
Color World
123 Main Street, Mumbai 400056
Date: dd/mm/yyyy
The Manager
National Paints Co. Ltd.
456 Second Avenue, Delhi 110001
Subject: Order for paint supplies
Dear Sir,
We are writing to place an order for various paint supplies from your company.
Please supply us with the following items:
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- 25 gallons of interior blue paint
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- 5 gallons of primer
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The document discusses different types of internal communication in organizations, including formal communication which follows predefined channels to share official company updates through methods like letters and reports, and informal "grapevine" communication which spreads unofficially such as rumors. It also describes four types of informal grapevine communication networks: single strand chain, gossip chain, probability chain, and cluster chain.
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Luca Pacioli was an Italian mathematician and Franciscan monk in the 15th century who is considered the 'Father of Accounting' because he was the first to publish a comprehensive book on the double-entry accounting method still used today. He worked with Leonardo da Vinci and taught him mathematics. The document then lists three "Golden Rules of Accounting": debit what comes in and credit what goes out for existing accounts, credit the giver and debit the receiver for personal accounts, and credit all income and debit all expenses.
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2. The T Account format
Every business transaction involves both a
debit and a credit
There has to be at least one debit and one credit for every
transaction, and the debits have to equal the credits
Scale or Balance
Receive
DEBIT
Give
CREDIT
3. Debits and Credits
A business’ debits must equal their credits.
Applying this to the accounting equation, which states that a business’
assets must equal their liabilities and owner’s equity, shows how the
normal balances for the accounts are determined.
4. Increases and Decreases in the Accounts
The type of account determines how
increases and decreases are recorded in it:
Credit Debit Credit
+
Debit Debit Credit
+ - +
- -
Assets
Stockholders’
Equity
Liabilities
Accounting
Equation
Rules of
Debit and
Credit
= +
5. Debit for
increase
+
Credit for
Decrease
-
Debit for
Decrease
-
Credit for
Increase
+
Debit for
Decrease
-
Credit for
Increase
+
Debit for
Increase
+
Credit for
Decrease
-
Debit for
Increase
+
Credit for
Decrease
-
Assets Liabilities Common Stock
Retained Earnings
Dividends
Revenues
Expenses
Debit for
Decrease
-
Credit for
Increase
+
Debit for
Decrease
-
Credit for
Increase
+
= +
Expanded Rules of Debit and Credit
7. The Double - Entry Accounting
System
The process of entering the transactions of
the business into the accounting records
commences with the journal entry.
The journal entry is an accounting
representation of a business transaction or
an economic event.
8. Accountanese…
The journal entry uses debits and credits to record the
transaction and once the journal entry has been prepared it
is posted to the accounts.
To make the journal entry one enters the debit first, which
is always on the left hand side of the entry, and then the
credit which is on the right.
Debit (from its Latin origin) means “left.” It is often
abbreviated as “dr.”
Credit (from its Latin origin) means “right.” It is often
abbreviated as “cr.”
9. Recording Transactions in the Journal
Steps of the journalizing process
Identify the transaction from source documents,
such as bank deposit slips, sale receipts, and
check stubs
Specify each account affected by the transaction
and classify it by type (asset, liability,
stockholders’ equity, revenue, or expense)
10. Recording Transactions in the Journal
Determine whether each account is increased
or decreased by the transaction
Determine whether to debit or credit the
account to record its increase or decrease
Enter the transaction in the journal, including a
brief explanation for the entry
Enter the debit side first and the credit side next
11. Recording Transactions in the Journal
A complete journal entry includes
The date of the transaction
The title of the account debited (placed flush
left in the Accounts and Explanations column)
The title of the account credited (indented
slightly)
The currency amount of the debit (left)
The currency amount of the credit (right)
A short explanation of the transaction (not
indented)
12. Technique of journalizing
The date of the transaction is entered into the date column.
The debit account title is entered at the extreme left margin
of the Account Titles and Explanation column. The credit
account title is indented on the next line.
GENERAL JOURNAL J1
Date Account Titles and Explanation Ref. Debit Credit
2005
Sept. 1 Cash 15,000
R. Neal, Capital 15,000
(Invested cash in business)
1 Computer Equipment 7,000
Cash 7,000
(Purchased equipment for
cash)
13. When three or more accounts are
required in one journal entry, the entry is
referred to as a compound entry.
Compound Journal Entry
2
1
3
GENERAL JOURNAL J1
Date Account Titles and Explanation Ref. Debit Credit
2005
July 1 Delivery Equipment 14,000
Cash 8,000
Accounts Payable 6,000
(Purchased truck for cash
with balance on account)
14. Posting to the General Ledger
Generally, in manual bookkeeping, the bookkeeper
makes journal entries, then posts the entries to a
ledger.
A ledger is a book that has each account on a
separate page. All of the amounts that affect that
account are entered there, and a running total is
kept.
15. An individual account is called a ledger.
A general ledger contains all the assets, liabilities,
and owner’s equity accounts.
GENERAL
LEDGER
The General Ledger
16. Cash……………………………..50,000
Common Stock……………. 50,000
Issued common stock to owners
Common Stock
Cash
50,000
50,000
Posting to the Ledger
Accounts and Explanation Debit Credit
Journal Entry
Journal Entry and Posting to the Ledger
17. The Flows of Accounting Data
Transaction
Occurs
Source
Documents
Prepared
Transaction
Analysis
Takes Place
Transaction
Entered in Journal
Amounts Posted
to Ledger
18. Consider again selected transactions of
Air & Sea Travel, Inc. - Transaction 1
Air & Sea Travel, Inc., received Rs.50,000 cash
and in turn issued common stock to the owners
Transaction
analysis
Journal
entry
Cash…………………………..50,000
Common Stock………… 50,000
Issued common stock to owners
Accounting
equation
Assets = Liabilities + Stockholders’ Equity
50,000 = 0 + 50,000
Ledger
Accounts
Common Stock
(1) 50,000 (1) 50,000
Cash
19. Air & Sea Travel, Inc. - Transaction 2
The business paid Rs. 40,000 for land
Transaction
analysis
Journal
entry
Land…………………………..40,000
Cash……………………. 40,000
Paid cash for land
Accounting
equation
Assets = Liabilities + Stockholders’ Equity
+40,000 = 0 + 0
-40,000
Ledger
Accounts
Land
Cash
(1) 50,000 (2) 40,000
(2) 40,000
20. The business purchased Rs.500 of office
supplies on account
Transaction
analysis
Journal
entry
Office supplies…………………500
Accounts payable……….. 500
Purchased office supplies on account
Accounting
equation
Assets = Liabilities + Stockholders’ Equity
+500 = +500 + 0
Ledger
Accounts
Accounts Payable
Office supplies
(3) 500 (3) 500
Air & Sea Travel, Inc. - Transaction 3
21. The business performed travel service for
clients and received cash of Rs.5,500
Transaction
analysis
Journal
entry
Cash…………………………..5,500
Service Revenue……… 5,500
Performed services for cash
Accounting
equation
Assets = Liabilities + Equity + Revenues
5,500 = 0 + 5,500
Ledger
Accounts
Service Revenue
Cash
(1) 50,000
(4) 5,500
(4) 5,500
(2) 40,000
Stockholders’
Air & Sea Travel, Inc. - Transaction 4
22. Accounts After Posting
(1) 50,000
(4) 5,500
(9) 1,000
(10) 22,000
Bal. 33,300
(2) 40,000
(6) 2,700
(7) 400
(11) 2,100
Cash
Each account has a balance, denoted as Bal.
This amount is the difference between the
account’s total debits and total credits
23. NetSolutions
A Sole Proprietorship
“ On November 1, 2012, I started a sole
proprietorship called NetSolutions. I plan to
use my knowledge of microcomputers and
offer computer consulting services for a fee.
The following double-entry transactions show
how amounts received (debits) always equal
amounts given (credits).”
Chris Clark,
Owner
24. Chris Clark
deposits $25,000
in a bank account
for NetSolutions.
Business Transactions
General Journal
receive
Debit
give
Credit
NetSolutions
(investee)
Chris Clark (investor)
give
Credit
Entry A.
Date Description Debit Credit
11/1
25. Chris Clark
deposits $25,000
in a bank account
for NetSolutions.
Business Transactions
General Journal
receive
Debit
give
Credit
NetSolutions
(investee)
Cash
Chris Clark (investor)
give
Credit
Entry A.
Date Description Debit Credit
11/1 Cash 25,000
26. Chris Clark
deposits $25,000
in a bank account
for NetSolutions.
Business Transactions
General Journal
Date Description Debit Credit
11/1 Cash 25,000
Chris Clark, Capital 25,000
receive
Debit
give
Credit
NetSolutions
(investee)
Cash A promise
to the owner
Chris Clark (investor)
give
Credit
Entry A.
27. NetSolutions buys
land for $20,000.
Business Transactions
receive
Debit
give
Credit
NetSolutions
(buyer)
Land Owner (seller)
give
Credit
Entry B.
General Journal
Date Description Debit Credit
11/5
28. NetSolutions buys
land for $20,000.
Business Transactions
receive
Debit
give
Credit
NetSolutions
(buyer)
Land
Land Owner (seller)
give
Credit
Entry B.
General Journal
Date Description Debit Credit
11/5 Land 20,000
29. NetSolutions buys
land for $20,000.
Business Transactions
receive
Debit
give
Credit
NetSolutions
(buyer)
Land Cash
Land Owner (seller)
give
Credit
Entry B.
General Journal
Date Description Debit Credit
11/5 Land 20,000
Cash 20,000
30. NetSolutions buys
supplies for
$1,350, agreeing to
pay in the near
future.
Business Transactions
receive
Debit
give
Credit
NetSolutions
(buyer)
Supplier (seller)
give
Credit
Entry C.
General Journal
Date Description Debit Credit
11/10
31. NetSolutions buys
supplies for
$1,350, agreeing to
pay in the near
future.
Business Transactions
receive
Debit
give
Credit
NetSolutions
(buyer)
Supplies
Supplier (seller)
give
Credit
Entry C.
General Journal
Date Description Debit Credit
11/10 Supplies 1,350
32. NetSolutions buys
supplies for
$1,350, agreeing to
pay in the near
future.
Business Transactions
receive
Debit
give
Credit
NetSolutions
(buyer)
Supplies
Supplier (seller)
give
Credit
Entry C.
A promise
to pay later
General Journal
Date Description Debit Credit
11/10 Supplies 1,350
Accounts Payable 1,350
33. NetSolutions
earns fees of
$7,500, receiving
cash.
Business Transactions
receive
Debit
give
Credit
NetSolutions
(seller)
Customer (buyer)
give
Credit
Entry D.
General Journal
Date Description Debit Credit
11/18
34. NetSolutions
earns fees of
$7,500, receiving
cash.
Business Transactions
receive
Debit
give
Credit
NetSolutions
(seller)
Cash
Customer (buyer)
give
Credit
Entry D.
General Journal
Date Description Debit Credit
11/18 Cash 7,500
35. NetSolutions
earns fees of
$7,500, receiving
cash.
Business Transactions
receive
Debit
give
Credit
NetSolutions
(seller)
Cash
Customer (buyer)
give
Credit
Entry D.
Services
General Journal
Date Description Debit Credit
11/18 Cash 7,500
Fees Earned 7,500
36. Date Description Debit Credit
NetSolutions paid:
wages, $2,125; rent,
$800; utilities, $450;
and miscellaneous,
$275.
Business Transactions
General Journal
receive
Debit
give
Credit
NetSolutions
(buyer)
Various suppliers
give
Credit
Entry E.
37. Date Description Debit Credit
11/18 Wages Expense 2,125
Rent Expense 800
Utilities Expense 450
Misc. Expense 275
NetSolutions paid:
wages, $2,125; rent,
$800; utilities, $450;
and miscellaneous,
$275.
Business Transactions
General Journal
receive
Debit
give
Credit
NetSolutions
(buyer)
Services,
benefits
Various suppliers
give
Credit
Entry E.
38. Date Description Debit Credit
11/18 Wages Expense 2,125
Rent Expense 800
Utilities Expense 450
Misc. Expense 275
Cash 3,650
NetSolutions paid:
wages, $2,125; rent,
$800; utilities, $450;
and miscellaneous,
$275.
Business Transactions
General Journal
receive
Debit
give
Credit
NetSolutions
(buyer)
Services,
benefits
Various suppliers
give
Credit
Entry E.
Cash
39. NetSolutions pays
$950 to creditors
on account.
Business Transactions
receive
Debit
give
Credit
NetSolutions
(payor)
Supplier (payee)
give
Credit
Entry F.
General Journal
Date Description Debit Credit
11/30
40. NetSolutions pays
$950 to creditors
on account.
Business Transactions
receive
Debit
give
Credit
NetSolutions
(payor)
Reduction in
obligation
Supplier (payee)
give
Credit
Entry F.
General Journal
Date Description Debit Credit
11/30 Accounts Payable 950
41. NetSolutions pays
$950 to creditors
on account.
Business Transactions
receive
Debit
give
Credit
NetSolutions
(payor)
Reduction in
obligation
Supplier (payee)
give
Credit
Entry F.
Cash
General Journal
Date Description Debit Credit
11/30 Accounts Payable 950
Cash 950
42. At the end of the
month, the cost of
supplies on hand
is $550.
Business Transactions
receive
Debit
give
Credit
NetSolutions
(user)
Internal Transaction
(no external entity)
give
Credit
Entry G.
General Journal
Date Description Debit Credit
11/30
43. At the end of the
month, the cost of
supplies on hand
is $550.
Business Transactions
receive
Debit
give
Credit
NetSolutions
(user)
Use of
supplies
Internal Transaction
(no external entity)
give
Credit
Entry G.
General Journal
Balance of Supplies account $1,350 less $550 on hand = $800 used
Date Description Debit Credit
11/30 Supplies Expense 800
44. At the end of the
month, the cost of
supplies on hand
is $550.
Business Transactions
receive
Debit
give
Credit
NetSolutions
(user)
Use of
supplies
Internal Transaction
(no external entity)
give
Credit
Entry G.
Supplies
General Journal
Date Description Debit Credit
11/30 Supplies Expense 800
Supplies 800
Balance of Supplies account $1,350 less $550 on hand = $800 used
45. Chris Clark
withdraws $2,000
in cash.
Business Transactions
receive
Debit
give
Credit
NetSolutions
(payor)
Chris Clark (payee)
give
Credit
Entry H.
General Journal
Date Description Debit Credit
11/30
46. Chris Clark
withdraws $2,000
in cash.
Business Transactions
receive
Debit
give
Credit
NetSolutions
(payor)
Reduction in
obligation
Chris Clark (payee)
give
Credit
Entry H.
General Journal
Date Description Debit Credit
11/30 Chris Clark, Drawing 2,000
47. Chris Clark
withdraws $2,000
in cash.
Business Transactions
receive
Debit
give
Credit
NetSolutions
(payor)
Reduction in
obligation
Chris Clark (payee)
give
Credit
Entry H.
Cash
General Journal
Date Description Debit Credit
11/30 Chris Clark, Drawing 2,000
Cash 2,000
49. 1. Transactions are analyzed
and recorded in journal.
Documents
Journal
Journal, Ledger, Trial Balance
50. 1. Transactions are analyzed
and recorded in journal.
Documents
Journal
2. Transactions are posted
from journal to ledger.
Journal Ledger
Journal, Ledger, Trial Balance
51. 1. Transactions are analyzed
and recorded in journal.
Documents
Journal
2. Transactions are posted
from journal to ledger.
Journal Ledger
3. Trial balance is prepared.
Journal, Ledger, Trial Balance
Trial Balance
52. The Trial Balance
At any time during the month, but usually at the end of
the month (or accounting period) one can prepare a
trial balance. A trial balance is just a list of accounts in
chart-of-accounts order with their balances-to-date
On a trial balance, there are two columns of numbers,
debits and credits. all of the debits go in the left-hand
column (debit columns) and credits in the credit
column.
They have to equal each other.
53. The Trial Balance
• The Trial Balance is a list of accounts and their balances at a
given time.
• The primary purpose of a trial balance is to prove debits =
credits after posting.
• If debits and credits do not agree, the trial balance can be used
to uncover errors in journalizing and posting.
56. Income
Statement
NetSolutions
Trial Balance
November 30, 2012
11 Cash 5,900
14 Supplies 550
17 Land 20,000
21 Accounts Payable 400
31 Chris Clark, Capital 25,000
32 Chris Clark, Drawing 2,000
41 Fees Earned 7,500
51 Wages Expense 2,125
52 Rent Expense 800
54 Utilities Expense 450
55 Supplies Expense 800
59 Miscellaneous Expense 275
32,900 32,900
57. Correcting Accounting Errors
If total debits and total credits on the trial balance
are not equal, then accounting errors exist
Reason(s) behind many of the out-of-balance
conditions can be detected by computing the
difference between debits and credits on the trial
balance and performing one or more of the
following actions . . .
58. Search the trial balance for a missing account
Search the journal for the amount of the difference
Divide the difference between total debits and
total credits by 2. A debit treated as a credit, or
vice versa, doubles the amount of the error
Divide the out-of-balance amount by 9. If the
result is evenly divisible by 9, the error may be a
slide (writing Rs. 61 as Rs. 610) or a transposition
(writing Rs. 61 as Rs.16)
Correcting Accounting Errors…
59. Check..
OGL Petrol station opened their new store
in Gothapatna and purchased 20000 litres
from HPCL at Rs 50 per litre. Vehicles
visiting the gas station made a sale of
about 16000 litres at Rs 75 each. End of
the month it found that it had 2200 litres
in the underground tank. It also appointed
a refill person for the month for a salary of
Rs 5000. What is OGL’s profit?