slide 2-1 chapter 2 the recording process financial accounting, ifrs edition weygandt kimmel kieso

Download Slide 2-1 Chapter 2 The Recording Process Financial Accounting, IFRS Edition Weygandt Kimmel Kieso

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  • Account Name

    Debit / Dr.

    Credit / Cr.

    Slide 2-*

    Double-entry accounting systemEach transaction must affect two or more accounts to keep the basic accounting equation in balance.Recording done by debiting at least one account and crediting another.DEBITS must equal CREDITS.SO 2 Define debits and credits and explain their use in recording business transactions.The AccountDebits and Credits

    Slide 2-*

    If Debits are greater than Credits, the account will have a debit balance.$10,000Transaction #2$3,000$15,0008,000Transaction #3BalanceTransaction #1Debits and CreditsSO 2 Define debits and credits and explain their use in recording business transactions.

  • Account Name

    Debit / Dr.

    Credit / Cr.

    Slide 2-*

    If Credits are greater than Debits, the account will have a credit balance.$10,000Transaction #2$3,000BalanceTransaction #1Debits and Credits$1,0008,000Transaction #3SO 2 Define debits and credits and explain their use in recording business transactions.

  • Account Name

    Debit / Dr.

    Credit / Cr.

    Slide 2-*

    Normal Balance CreditNormal Balance DebitDebits and Credits SummarySO 2

    Chapter 3-*

    Assets

    Debit / Dr.

    Credit / Cr.

    Normal Balance

    Chapter 3-*

    Debit / Dr.

    Credit / Cr.

    Normal Balance

    Expense

    Chapter 3-*

    Liabilities

    Debit / Dr.

    Credit / Cr.

    Normal Balance

    Chapter 3-*

    Debit / Dr.

    Credit / Cr.

    Normal Balance

    Equity

    Chapter 3-*

    Debit / Dr.

    Credit / Cr.

    Normal Balance

    Revenue

    Slide 2-*

    Transactions AnalysisSummary of TransactionsIllustration 1-10Tabular summary ofSoftbyte transactionsSO 7 Analyze the effects of business transactions on the accounting equation.debitcredit

    Slide 2-*

    Balance Sheet Income Statement=+-AssetLiabilityEquityRevenueExpenseDebitCreditDebits and Credits SummarySO 2 Define debits and credits and explain their use in recording business transactions.

    Slide 2-*

    Assets - Debits should exceed credits.Liabilities Credits should exceed debits. The normal balance is on the increase side.Assets and LiabilitiesSO 2 Define debits and credits and explain their use in recording business transactions.

    Chapter 3-*

    Assets

    Debit / Dr.

    Credit / Cr.

    Normal Balance

    Chapter 3-*

    Liabilities

    Debit / Dr.

    Credit / Cr.

    Normal Balance

    Slide 2-*

    Issuance of share capital and revenues increase equity (credit). Dividends and expenses decrease equity (debit).Equity RelationshipsSO 2 Define debits and credits and explain their use in recording business transactions.

    Chapter 3-*

    Debit / Dr.

    Credit / Cr.

    Normal Balance

    Share Capital

    Chapter 3-*

    Dividends

    Debit / Dr.

    Credit / Cr.

    Normal Balance

    Chapter 3-*

    Debit / Dr.

    Credit / Cr.

    Normal Balance

    Equity

    Chapter 3-*

    Debit / Dr.

    Credit / Cr.

    Normal Balance

    Retained Earnings

    Slide 2-*

    The purpose of earning revenues is to benefit the shareholders.The effect of debits and credits on revenue accounts is the same as their effect on equity.Expenses have the opposite effect: expenses decrease equity.Revenue and ExpenseSO 2 Define debits and credits and explain their use in recording business transactions.

    Chapter 3-*

    Debit / Dr.

    Credit / Cr.

    Normal Balance

    Expense

    Chapter 3-*

    Debit / Dr.

    Credit / Cr.

    Normal Balance

    Revenue

    Slide 2-*

    Summary of Debit/Credit RulesRelationship among the assets, liabilities and equity of a business: The equation must be in balance after every transaction. For every Debit there must be a Credit.SO 2 Define debits and credits and explain their use in recording business transactions.Illustration 2-12

    Slide 2-*

    Business documents, such as a sales slip, a check, a bill, or a cash register tape, provide evidence of the transaction.Steps in the Recording ProcessSO 3 Identify the basic steps in the recording process.Analyze each transactionEnter transaction in a journalTransfer journal information to ledger accountsIllustration 2-13

    Slide 2-*

    Book of original entry.Transactions recorded in chronological order.Contributions to the recording process:Discloses the complete effects of a transaction.Provides a chronological record of transactions.Helps to prevent or locate errors because the debit and credit amounts can be easily compared.SO 4 Explain what a journal is and how it helps in the recording process.Steps in the Recording ProcessJournalizing

    Slide 2-*

    Share capitalJournalizing - Entering transaction data in the journal.SO 4Illustration: On September 1, stockholders invested $15,000 cash in exchange for ordinary shares, and Softbyte purchased computer equipment for $7,000 cash.CashSept. 115,00015,000General JournalComputer equipmentCash7,0007,000Illustration 2-14Solution on notes pageSteps in the Recording Process

    Sheet1

    DateAccount TitleRef.DebitCredit

    Slide 2-*

    8,000Delivery equipmentCash14,0006,000Accounts payableSept. 1Illustration: On July 1, Butler Company purchases a delivery truck costing $14,000. It pays $8,000 cash now and agrees to pay the remaining $6,000 on account.General JournalIllustration 2-15SO 4Solution on notes pageSimple and Compound EntriesSteps in the Recording Process

    Sheet1

    DateAccount TitleRef.DebitCredit

    Slide 2-*

    General Ledger All accounts maintained by a company. All asset, liability, equity, revenue and expense accounts. SO 5 Explain what a ledger is and how it helps in the recording process.The LedgerSteps in the Recording ProcessIllustration 2-16

    Slide 2-*

    T-account form used in accounting textbooks.Ledger form used in practice.SO 5 Explain what a ledger is and how it helps in the recording process.Illustration 2-17The LedgerStandard Form of Account

    Slide 2-*

    The LedgerIllustration 2-18SO 5 Explain what a ledger is and how it helps in the recording process.Chart of Accounts

    Slide 2-*

    Posting the process of transferring amounts from the journal to the ledger accounts. Illustration 2-19SO 6 Explain what posting is and how it helps in the recording process.Posting

    Slide 2-*

    The Recording Process IllustratedFollow these steps:1. Determine what type of account is involved.2. Determine what items increased or decreased and by how much.3. Translate the increases and decreases into debits and credits.Illustration 2-20SO 6 Explain what posting is and how it helps in the recording process.

    Slide 2-*

    The Recording Process IllustratedIllustration 2-21SO 6 Explain what posting is and how it helps in the recording process.

    Slide 2-*

    The Recording Process IllustratedIllustration 2-22SO 6

    Slide 2-*

    The Recording Process IllustratedIllustration 2-23SO 6

    Slide 2-*

    The Recording Process IllustratedSO 6Illustration 2-24

    Slide 2-*

    The Recording Process IllustratedSO 6Illustration 2-25

    Slide 2-*

    The Recording Process IllustratedIllustration 2-26SO 6 Explain what posting is and how it helps in the recording process.

    Slide 2-*

    The Recording Process IllustratedSO 6Illustration 2-27

    Slide 2-*

    The Recording Process IllustratedSO 6Illustration 2-28

    Slide 2-*

    The Recording Process IllustratedSO 6Illustration 2-29

    Slide 2-*

    Katherine Turner recorded the following transactions during the month of March. Solution on notes pageThe Recording Process IllustratedPost these entries to the Cash account. SO 6

    Slide 2-*

    A list of accounts and their balances at a given time.Purpose is to prove that debits equal credits.The Trial BalanceSO 7 Prepare a trial balance and explain its purposes. Illustration 2-32

    Slide 2-*

    The trial balance may balance even when a transaction is not journalized, a correct journal entry is not posted, a journal entry is posted twice, incorrect accounts are used in journalizing or posting, or offsetting errors are made in recording the amount of a transaction.The Trial BalanceLimitations of a Trial BalanceSO 7 Prepare a trial balance and explain its purposes.

    Slide 2-*

    Debits:increase both assets and liabilities.decrease both assets and liabilities.increase assets and decrease liabilities.decrease assets and increase liabilities.Review QuestionDebits and Credits SummarySolution notes pageDebits:increase both assets and liabilities.decrease both assets and liabilities.increase assets and decrease liabilities.decrease assets and increase liabilities.SO 2 Define debits and credits and explain their use in recording business transactions.

    Slide 2-*

    Accounts that normally have debit balances are:assets, expenses, and revenues.assets, expenses, and retained earnings.assets, liabilities, and dividends.assets, dividends, and expenses.Review QuestionSolution notes pageSO 2 Define debits and credits and explain their use in recording business transactions.Summary of Debit/Credit RulesAccounts that normally have debit balances are:assets, expenses, and revenues.assets, expenses, and retained earnings.assets, liabilities, and dividends.assets, dividends, and expenses.

    Slide 2-*

    Accounts that normally have debit balances are:assets, expenses, and revenues.assets, expenses, and retained earnings.assets, liabilities, and dividends.assets, dividends, and expenses.Review QuestionSolution notes pageSO 2 Define debits and credits and explain their use in recording business transactions.Summary of Debit/Credit RulesIf your company buy a computer, .. account will increase CashEquipmentNotes PayableEquit

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