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Analyzing & Recording Business Transactions. Chapter 2. Source documents. Identify and describe transactions and events entering the accounting process. Account. Is a record of increases and decreases in a specific asset, liability, equity, revenue or expense Ledger

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Analyzing & Recording Business Transactions


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    Presentation Transcript
    1. Analyzing & Recording Business Transactions Chapter 2

    2. Source documents • Identify and describe transactions and events entering the accounting process.

    3. Account • Is a record of increases and decreases in a specific asset, liability, equity, revenue or expense • Ledger • Is a record containing all accounts used by a company

    4. Assets • Cash • Accounts receivable • What customers owe us • Note receivable • Prepaid Accounts • Supplies • Equipment

    5. Liabilities • Accounts payable • Money owed to suppliers • Notes payable • Unearned revenue • Deposits from customers

    6. Equity • Common Stock • Shareholders investment in the business • Dividends • Distributions of income to shareholders • Retained Earnings

    7. Chart of Accounts • List of an accounts a company uses and includes an idea. • 101-199 Assets • 201-299 Liabilities • 301-399 Equity • 401-499 Revenues • 501-599 Expenses

    8. T- Accounts Debit Credit Right side Left side

    9. Accounting Equation + Liabilities Assets = Equity DR DR CR DR CR CR       Double entry accounting: each transactions affect, And recorded in, at least two accounts Debits = Credits

    10. Journal Gives a complete record of each transaction in one place Journalizing Process of recording transactions Posting Process of transferring journal entry info to the ledger Journal

    11. Journal

    12. Journal Entries • Go to excel worksheet

    13. Transactions • Shareholder invests in the business $30,000 in cash • Co pays $2,500 cash for supplies • Co pays $26,000 cash for equipment • Co purchases $7,100 of supplies on account ( on credit) • Co provides consulting services and collects $4,200 cash

    14. Transactions • Co pays for $1,000 cash for rent • Co pays $700 cash for salaries • Co provides consulting services of $1,600 and bills the customer • Co receives $1,600 cash from the client billed • Co pays $900 on account • Co pays dividends $1,000

    15. Transactions • Co receives $3,000 cash in advance • Co pays $2,400 cash for insurance for one year

    16. Posting to the ledger • Record the transactions into ledger by account name • Prepare a TRIAL BALANCE • List of accounts and balances