Sie sind auf Seite 1von 61

ACCT 201 ACCT 201 ACCT 201

Accounting Information System

Chapter

UAA ACCT 201 Principles of Financial Accounting Dr. Fred Barbee

ACCT 201 ACCT 201 ACCT 201

Accounting Information System

Chapter

First . . . A brief review of Day #1 Topics.

ACCT 201 ACCT 201 ACCT 201

Learning Accounting
If you want to learn accounting, you learn it one concept at a time, one principle at a time.

The Accounting System: A Conceptual Overview


Operating Environment
Entity B Business Entity A
System Inputs: Measurable Transactions and Events Process and Summarize System Outputs: Financial Statements and Reports

Entity C

Entity D

Entity E

A business continues operation instead of being closed or sold.

A business is accounted for separately from its owner(s).

Financial Statement information is supported by independent, unbiased evidence.

Express transactions and events in monetary units.

Financial statements are based on actual costs incurred in business transactions.

The Accounting Process

Exh. 2.2

Transaction or event

Source documents

Analysis

Reporting Trial balance Recording & posting

Account Title
Left Side Right Side

Account Title
Date Item Post Ref Debit

Account No. ### Credit Balance Debit Credit

Assets

Liabilities

Owners Equity

Capital Stock

Retained Earnings

The Accounting Equation A = L + OE

Revenue

-Expenses

Net Income

ACCT 201 ACCT 201 ACCT 201

Analyzing Transactions
1. Analyze the transaction and its source. 2. Identify the impact of the transaction on account balances. 3. Identify the financial statements that are impacted by the transaction.

ACCT 201 ACCT 201 ACCT 201

Chapter

Exercise 2-5

Identifying effects of transactions on accounting equation Learning Objectives: A1 (p. 84)

ACCT 201 ACCT 201 ACCT 201

Accounting Information System

Chapter

Text Section: Processing and Analyzing Transactions (p. 52)

ACCT 201 ACCT 201 ACCT 201

C6

Learning Objective

Describe a ledger and a chart of accounts.

Conceptual

ACCT 201

ACCT 201

ACCT 201

ACCT 201 ACCT 201 ACCT 201

C7

Learning Objective

Define debits and credits and explain their role in double-entry accounting.

Conceptual

ACCT 201 ACCT 201 ACCT 201

Debits and Credits


The debit/credit convention or coding system is very simple. Do not make it difficult because you cannot accept its simplicity.

ACCT 201 ACCT 201 ACCT 201

Lets . . .

. . . At Debits

ACCT 201 ACCT 201 ACCT 201

Debits
Debit comes from Latin and merely means left, or the lefthand side of an account. Abbreviated DR.

Account Title
Left Side
We need to stop here and change our way of thinking!

Debit Side

Symbolically, lets erase that memory


C:\memory\debit\erase *.*

All files in directory will be deleted Are you sure (Y/N)?

ACCT 201 ACCT 201 ACCT 201

Lets . . .

. . . At Credits

ACCT 201 ACCT 201 ACCT 201

Credits
Credit also comes from the Latin, and means right, or the righthand side of an account. Abbreviated CR.

Account Title
Right Side
Lets stop here and modify our thinking at least for this class!

Credit Side

Symbolically, lets erase that memory


C:\memory\credit\erase *.*

All files in directory will be deleted Are you sure (Y/N)?

So, how can we use this?

Thats a good question!

Accounts actually provide two equalities or balances . . .

ACCT 201 ACCT 201 ACCT 201

Lets . . .

At the first equality

ACCT 201

Assets

The algebraic relationship in the fundamental accounting model.


Liabilities Owners Equity

ACCT 201 ACCT 201

ACCT 201 ACCT 201 ACCT 201

Account Title

Debi Credit t

Alway

Assets
DR CR

Liabilities
DR CR

Owners Equity
DR CR

ACCT 201 ACCT 201 ACCT 201

The Second Equality . . .


Debits Credits

The algebraic relationship between account increases and decreases.

Debit-Credit Rules . . .
Account
Assets Liabilities Owners Equity Revenue Expenses Inc. Debit Credit Credit Credit Debit Dec. Credit Debit Debit Debit Credit

Debit-Credit Rules . . .
Debits Increase Decrease Assets Expenses
Liabilities Equity Revenue

Credits
Liabilities Equity Revenue

Assets Expenses

ACCT 201 ACCT 201 ACCT 201

Basic Facts About Accounts

ACCT 201 ACCT 201 ACCT 201

For every transaction there must be at least one debit and one credit;

ACCT 201 ACCT 201 ACCT 201

Debits must always equal credits for each transaction, and;

ACCT 201 ACCT 201 ACCT 201

Debits are always entered on the left side of an account and credits on the right side.

ACCT 201

ACCT 201

ACCT 201

ncrease ebits xpense s ssets

evenues quity iabilities ncrease redits

ACCT 201
After Eating Dinner
Accounts increased with a debit: Assets Expenses

Lets Read the Comics


Accounts increased with a credit: Liabilities Revenues Capital

ACCT 201 ACCT 201

Dividends

ACCT 201 ACCT 201 ACCT 201

P1

Learning Objective

Record transactions in a journal and post entries to a ledger.

Procedural

ACCT 201 ACCT 201 ACCT 201

Steps in Processing Transactions


Assets Assets

Liabilities Liabilities

Equity Equity

Step 1: Examine source documents.

Step 2: Analyze transactions.

We saw these steps earlier. Now, lets look at some additional ones.

Steps in Processing Transactions


Assets Assets

Liabilities Liabilities

Equity Equity

Step 1: Examine source documents.


AC C O UNT NAM E :
D a te D e s c rip tio n PR

Step 2: Analyze transactions.


AC C O UNT No .
D e b it C re d it B a la nc e

Step 5: Prepare a trial balance.

Step 4: Record the journal information in a ledger.

Step 3: Record transactions in a journal.

ACCT 201 ACCT 201 ACCT 201


General Journal
Date Jan Description Office Supplies Accounts Payable
Purchase of art and office supplies on credit

Page 1 Debit 1,800 800 2,600 Credit

PR

6 Art Supplies

ACCT 201 ACCT 201 ACCT 201

Journals . . .
A journal contains a chronological record of the transactions of a business.

ACCT 201 ACCT 201 ACCT 201

Advantages
Sets forth transactions of each day. Records transactions in chronological order. Shows the analysis of each transaction in terms of debit and credit effects. Supplies an explanation of each transaction

ACCT 201 ACCT 201 ACCT 201

Advantages
Serves as a source for future reference to accounting transactions. Removes lengthy explanations from the ledger accounts. Makes posting the ledger at convenient times possible.

ACCT 201 ACCT 201 ACCT 201

Advantages
Assists in keeping the ledger in balance. Aids in tracing errors. Promotes the division of labor.

General Journal for FastForward


Transaction Date Titles of Affected Accounts

Transaction explanation

Dollar amount of debits and credits

Balance Column Ledger


T-accounts are useful illustrations, but balance column ledger accounts are used in practice.

Balance Column Ledger


Note the the t-account tool is derived from the debit and credit columns of the ledger.

Balance Column Ledger


The last line in the balance column shows the current balance in the account.

Exh. 2.16

Posting Journal Entries - Example

Identify the account.

Posting Journal Entries - Example

Enter the date.

Posting Journal Entries - Example

Enter the amount.

Posting Journal Entries - Example

Enter the journal reference.

Posting Journal Entries - Example

Compute the balance.

Posting Journal Entries - Example

Enter the ledger reference.