bus 2101 decision making financial information financial statement analysis financial statements...
Post on 19-Dec-2015
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BUS 2101
Decision Making
Financial Information Business Activities
Financial Statement Analysis
Financial Statements
GAAP
Operating
Investing
Financing
Income Statement
Users
External
Internal
Statement of Cash Flow
Balance Sheet
Annual Reports
Management Discussion
Notes
Auditor’s Report
Statement of Retained Earnings
Ratios
Liquidity
Profitability
Solvency
Market
Preparation
The Big Picture…
Accounting Information System
• Debits and credits• General Journal • Ledger• Chart of accounts• Posting• Trial balance
Debits and credits
Accounting Equation
Assets = Liabilities + Equity
Dr. + Cr. - Dr. - Cr. +ExpensesDividends
Revenue
Dr. - Cr. +
General Journal
Dr. Cr.
1/28/2003 Cash 100,000.00
Common stock 100,000.00
1/29/2003 Office Equipment 5,000.00
Cash 1,000.00
Notes Payable 4,000.00
Explanation needed?
Chart of accounts
• List of all accounts• See page 118.
Post to Ledger
2-Jan 4,359 6-Jan 5,000 7-Jan 21,334 9-Jan
12-Jan 47,539 16-Jan24-Jan 28,659 24-Jan
101,891 5,000
96,891
Office Equipment
Trial Balance
Dr. Cr.Cash 15,200 Supplies 2,500 Office equipment 5,600 Notes payable 5,000 Accounts payable 2,500 Common stock 11,200 Dividends 500 Service revenue 10,000 Salaries expense 4,000 Rent expense 900 -
28,700 28,700
Chucktown Chops
Trial balance
• Just because it’s in balance can’t tell if– All transactions recorded– All journal entries posted– Journal entry posted more than once– Incorrect accounts used in journal
entries and posting
Trial balance
• If it does not balance– Check your work in the reverse order of
preparation• Check addition of trial balance• Determine amount of difference
– Look for this amount» Fail to post a credit, for example.
– Divide difference by 2. Look for this.» Record debit as a credit, for example.
– Divide difference by 9. If result is a whole number» Transposition error. Record 81 as 18, for example.