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Transcript of ACCT 201 ACCT 201 ACCT 201 Accounting Information System UAA – ACCT 201 Principles of Financial...
![Page 1: ACCT 201 ACCT 201 ACCT 201 Accounting Information System UAA – ACCT 201 Principles of Financial Accounting Dr. Fred Barbee Chapter 2.](https://reader035.fdocuments.in/reader035/viewer/2022062304/56649cf05503460f949c00f9/html5/thumbnails/1.jpg)
AC
CT 2
01 A
CC
T 2
01
AC
CT 2
01
Accounting Information System
UAA – ACCT 201 Principles of Financial
Accounting Dr. Fred Barbee
Chap
ter 2
![Page 2: ACCT 201 ACCT 201 ACCT 201 Accounting Information System UAA – ACCT 201 Principles of Financial Accounting Dr. Fred Barbee Chapter 2.](https://reader035.fdocuments.in/reader035/viewer/2022062304/56649cf05503460f949c00f9/html5/thumbnails/2.jpg)
AC
CT 2
01 A
CC
T 2
01
AC
CT 2
01
Accounting Information System
First . . . A brief review of Day #2
Topics.
Chap
ter 2
![Page 3: ACCT 201 ACCT 201 ACCT 201 Accounting Information System UAA – ACCT 201 Principles of Financial Accounting Dr. Fred Barbee Chapter 2.](https://reader035.fdocuments.in/reader035/viewer/2022062304/56649cf05503460f949c00f9/html5/thumbnails/3.jpg)
AC
CT 2
01 A
CC
T 2
01
AC
CT 2
01
![Page 4: ACCT 201 ACCT 201 ACCT 201 Accounting Information System UAA – ACCT 201 Principles of Financial Accounting Dr. Fred Barbee Chapter 2.](https://reader035.fdocuments.in/reader035/viewer/2022062304/56649cf05503460f949c00f9/html5/thumbnails/4.jpg)
AC
CT 2
01 A
CC
T 2
01
AC
CT 2
01
Debits and Credits
The debit/credit convention or coding system is very simple.
Do not make it difficult because you cannot accept its simplicity.
![Page 5: ACCT 201 ACCT 201 ACCT 201 Accounting Information System UAA – ACCT 201 Principles of Financial Accounting Dr. Fred Barbee Chapter 2.](https://reader035.fdocuments.in/reader035/viewer/2022062304/56649cf05503460f949c00f9/html5/thumbnails/5.jpg)
AC
CT 2
01 A
CC
T 2
01
AC
CT 2
01
Debits
Debit comes from Latin and merely means “left,” or the “left-hand” side of an account. Abbreviated “DR.”
![Page 6: ACCT 201 ACCT 201 ACCT 201 Accounting Information System UAA – ACCT 201 Principles of Financial Accounting Dr. Fred Barbee Chapter 2.](https://reader035.fdocuments.in/reader035/viewer/2022062304/56649cf05503460f949c00f9/html5/thumbnails/6.jpg)
Account Title
Left Side
Debit Side
We need to stop here
and change our way of thinking!
![Page 7: ACCT 201 ACCT 201 ACCT 201 Accounting Information System UAA – ACCT 201 Principles of Financial Accounting Dr. Fred Barbee Chapter 2.](https://reader035.fdocuments.in/reader035/viewer/2022062304/56649cf05503460f949c00f9/html5/thumbnails/7.jpg)
Symbolically, let’s erase that memory
C:\memory\debit\erase *.*
Are you sure (Y/N)?
All files in directory will be deleted
![Page 8: ACCT 201 ACCT 201 ACCT 201 Accounting Information System UAA – ACCT 201 Principles of Financial Accounting Dr. Fred Barbee Chapter 2.](https://reader035.fdocuments.in/reader035/viewer/2022062304/56649cf05503460f949c00f9/html5/thumbnails/8.jpg)
AC
CT 2
01 A
CC
T 2
01
AC
CT 2
01
Credits
Credit also comes from the Latin, and means “right,” or the “right-hand” side of an account. Abbreviated “CR.”
![Page 9: ACCT 201 ACCT 201 ACCT 201 Accounting Information System UAA – ACCT 201 Principles of Financial Accounting Dr. Fred Barbee Chapter 2.](https://reader035.fdocuments.in/reader035/viewer/2022062304/56649cf05503460f949c00f9/html5/thumbnails/9.jpg)
Account Title
Right Side
Credit Side
Let’s stop here and
modify our thinking – at least for this
class!
![Page 10: ACCT 201 ACCT 201 ACCT 201 Accounting Information System UAA – ACCT 201 Principles of Financial Accounting Dr. Fred Barbee Chapter 2.](https://reader035.fdocuments.in/reader035/viewer/2022062304/56649cf05503460f949c00f9/html5/thumbnails/10.jpg)
Symbolically, let’s erase that
memory
C:\memory\credit\erase *.*
Are you sure (Y/N)?
All files in directory will be deleted
![Page 11: ACCT 201 ACCT 201 ACCT 201 Accounting Information System UAA – ACCT 201 Principles of Financial Accounting Dr. Fred Barbee Chapter 2.](https://reader035.fdocuments.in/reader035/viewer/2022062304/56649cf05503460f949c00f9/html5/thumbnails/11.jpg)
Assets
Liabilities
Owners’ Equity
The algebraic relationship in the fundamental accounting model.
AC
CT 2
01 A
CC
T 2
01
AC
CT 2
01
![Page 12: ACCT 201 ACCT 201 ACCT 201 Accounting Information System UAA – ACCT 201 Principles of Financial Accounting Dr. Fred Barbee Chapter 2.](https://reader035.fdocuments.in/reader035/viewer/2022062304/56649cf05503460f949c00f9/html5/thumbnails/12.jpg)
Account Title
Debit
Credit
Always
AC
CT 2
01 A
CC
T 2
01
AC
CT 2
01
![Page 13: ACCT 201 ACCT 201 ACCT 201 Accounting Information System UAA – ACCT 201 Principles of Financial Accounting Dr. Fred Barbee Chapter 2.](https://reader035.fdocuments.in/reader035/viewer/2022062304/56649cf05503460f949c00f9/html5/thumbnails/13.jpg)
DR CR
Assets
LiabilitiesDR CR
DR CR
Owners’ Equity
![Page 14: ACCT 201 ACCT 201 ACCT 201 Accounting Information System UAA – ACCT 201 Principles of Financial Accounting Dr. Fred Barbee Chapter 2.](https://reader035.fdocuments.in/reader035/viewer/2022062304/56649cf05503460f949c00f9/html5/thumbnails/14.jpg)
Debits Credits
The Second Equality . . .
The algebraic relationship
between account increases and
decreases.
AC
CT 2
01 A
CC
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01
AC
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01
![Page 15: ACCT 201 ACCT 201 ACCT 201 Accounting Information System UAA – ACCT 201 Principles of Financial Accounting Dr. Fred Barbee Chapter 2.](https://reader035.fdocuments.in/reader035/viewer/2022062304/56649cf05503460f949c00f9/html5/thumbnails/15.jpg)
Expenses
Revenue
Owners’ Equity
Liabilities
Assets
Debit-Credit Rules . . .
Debit Credit
Credit Debit
Credit Debit
Credit Debit
Debit Credit
Account Inc. Dec.
![Page 16: ACCT 201 ACCT 201 ACCT 201 Accounting Information System UAA – ACCT 201 Principles of Financial Accounting Dr. Fred Barbee Chapter 2.](https://reader035.fdocuments.in/reader035/viewer/2022062304/56649cf05503460f949c00f9/html5/thumbnails/16.jpg)
Debit-Credit Rules . . .
Debits Credits
Assets Expenses
Liabilities Equity
RevenueIncrease
Decrease Liabilities
Equity Revenue
Assets Expenses
![Page 17: ACCT 201 ACCT 201 ACCT 201 Accounting Information System UAA – ACCT 201 Principles of Financial Accounting Dr. Fred Barbee Chapter 2.](https://reader035.fdocuments.in/reader035/viewer/2022062304/56649cf05503460f949c00f9/html5/thumbnails/17.jpg)
ebits
ncrease
ssets
xpenses
![Page 18: ACCT 201 ACCT 201 ACCT 201 Accounting Information System UAA – ACCT 201 Principles of Financial Accounting Dr. Fred Barbee Chapter 2.](https://reader035.fdocuments.in/reader035/viewer/2022062304/56649cf05503460f949c00f9/html5/thumbnails/18.jpg)
iabilities
evenues
redits
ncrease
quity
![Page 19: ACCT 201 ACCT 201 ACCT 201 Accounting Information System UAA – ACCT 201 Principles of Financial Accounting Dr. Fred Barbee Chapter 2.](https://reader035.fdocuments.in/reader035/viewer/2022062304/56649cf05503460f949c00f9/html5/thumbnails/19.jpg)
ACCOUNT NAME: ACCOUNT No.
Date Description PR Debit Credit Balance
Step 4: Record the journal information in
a ledger.
Step 3: Record transactions in
a journal.
Step 5: Prepare a trial balance.
Steps in Processing Transactions
Step 1: Examine source
documents.
LiabilitiesLiabilities EquityEquityAssetsAssets = +
Step 2: Analyze transactions.
![Page 20: ACCT 201 ACCT 201 ACCT 201 Accounting Information System UAA – ACCT 201 Principles of Financial Accounting Dr. Fred Barbee Chapter 2.](https://reader035.fdocuments.in/reader035/viewer/2022062304/56649cf05503460f949c00f9/html5/thumbnails/20.jpg)
AC
CT 2
01 A
CC
T 2
01
AC
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01
General Journal Page 1
Date Description PR Debit Credit
Jan 6 Art Supplies 1,800
Office Supplies 800
Accounts Payable
2,600
Purchase of art and office supplies on credit
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Transaction Date
Titles of Affected Accounts
Dollar amount of debits and credits
Transaction explanation
General Journal for FastForward
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T-accounts are useful illustrations, but balance column ledger
accounts are used in practice.
Balance Column Ledger
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1 Identify the account.
Posting Journal Entries - Example
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2 Enter the date.
Posting Journal Entries - Example
![Page 25: ACCT 201 ACCT 201 ACCT 201 Accounting Information System UAA – ACCT 201 Principles of Financial Accounting Dr. Fred Barbee Chapter 2.](https://reader035.fdocuments.in/reader035/viewer/2022062304/56649cf05503460f949c00f9/html5/thumbnails/25.jpg)
3Enter the amount.
Posting Journal Entries - Example
![Page 26: ACCT 201 ACCT 201 ACCT 201 Accounting Information System UAA – ACCT 201 Principles of Financial Accounting Dr. Fred Barbee Chapter 2.](https://reader035.fdocuments.in/reader035/viewer/2022062304/56649cf05503460f949c00f9/html5/thumbnails/26.jpg)
4Enter the journal reference.
Posting Journal Entries - Example
![Page 27: ACCT 201 ACCT 201 ACCT 201 Accounting Information System UAA – ACCT 201 Principles of Financial Accounting Dr. Fred Barbee Chapter 2.](https://reader035.fdocuments.in/reader035/viewer/2022062304/56649cf05503460f949c00f9/html5/thumbnails/27.jpg)
5
Compute the balance.
Posting Journal Entries - Example
![Page 28: ACCT 201 ACCT 201 ACCT 201 Accounting Information System UAA – ACCT 201 Principles of Financial Accounting Dr. Fred Barbee Chapter 2.](https://reader035.fdocuments.in/reader035/viewer/2022062304/56649cf05503460f949c00f9/html5/thumbnails/28.jpg)
Enter the ledger reference. 6
Posting Journal Entries - Example
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AC
CT 2
01 A
CC
T 2
01
AC
CT 2
01
Accounting Information System
Text Section:Trial Balance (p. 63)
Chap
ter 2
![Page 30: ACCT 201 ACCT 201 ACCT 201 Accounting Information System UAA – ACCT 201 Principles of Financial Accounting Dr. Fred Barbee Chapter 2.](https://reader035.fdocuments.in/reader035/viewer/2022062304/56649cf05503460f949c00f9/html5/thumbnails/30.jpg)
AC
CT 2
01 A
CC
T 2
01
AC
CT 2
01
Learning Objective
Prepare and explain the use of a trial balance.
P2
Procedural
![Page 31: ACCT 201 ACCT 201 ACCT 201 Accounting Information System UAA – ACCT 201 Principles of Financial Accounting Dr. Fred Barbee Chapter 2.](https://reader035.fdocuments.in/reader035/viewer/2022062304/56649cf05503460f949c00f9/html5/thumbnails/31.jpg)
AC
CT 2
01 A
CC
T 2
01
AC
CT 2
01
Trial Balance
A Trial Balance is a listing of all accounts and their balances at a point in time.
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AC
CT 2
01 A
CC
T 2
01
AC
CT 2
01
Accounting Information System
Text Section:Unadjusted Financial
Statements (p. 68)
Chap
ter 2
![Page 34: ACCT 201 ACCT 201 ACCT 201 Accounting Information System UAA – ACCT 201 Principles of Financial Accounting Dr. Fred Barbee Chapter 2.](https://reader035.fdocuments.in/reader035/viewer/2022062304/56649cf05503460f949c00f9/html5/thumbnails/34.jpg)
AC
CT 2
01 A
CC
T 2
01
AC
CT 2
01
Learning Objective
Prepare unadjusted financial statements from business transactions.
P3
Procedural
![Page 35: ACCT 201 ACCT 201 ACCT 201 Accounting Information System UAA – ACCT 201 Principles of Financial Accounting Dr. Fred Barbee Chapter 2.](https://reader035.fdocuments.in/reader035/viewer/2022062304/56649cf05503460f949c00f9/html5/thumbnails/35.jpg)
AC
CT 2
01 A
CC
T 2
01
AC
CT 2
01
Income Statement
A statement showing revenues and expenses for a period of time.
Revenues = Inflows of assets in exchange for products and services provided to customers.
Expenses = Outflows or the using up of assets that result from providing products and services to customers.
![Page 36: ACCT 201 ACCT 201 ACCT 201 Accounting Information System UAA – ACCT 201 Principles of Financial Accounting Dr. Fred Barbee Chapter 2.](https://reader035.fdocuments.in/reader035/viewer/2022062304/56649cf05503460f949c00f9/html5/thumbnails/36.jpg)
Exh.2.19
![Page 37: ACCT 201 ACCT 201 ACCT 201 Accounting Information System UAA – ACCT 201 Principles of Financial Accounting Dr. Fred Barbee Chapter 2.](https://reader035.fdocuments.in/reader035/viewer/2022062304/56649cf05503460f949c00f9/html5/thumbnails/37.jpg)
AC
CT 2
01 A
CC
T 2
01
AC
CT 2
01
Statement of Retained Earnings
A statement showing additions to (net income) and deductions from (net loss, dividends) the Retained Earnings account.
![Page 38: ACCT 201 ACCT 201 ACCT 201 Accounting Information System UAA – ACCT 201 Principles of Financial Accounting Dr. Fred Barbee Chapter 2.](https://reader035.fdocuments.in/reader035/viewer/2022062304/56649cf05503460f949c00f9/html5/thumbnails/38.jpg)
Exh.2.19
![Page 39: ACCT 201 ACCT 201 ACCT 201 Accounting Information System UAA – ACCT 201 Principles of Financial Accounting Dr. Fred Barbee Chapter 2.](https://reader035.fdocuments.in/reader035/viewer/2022062304/56649cf05503460f949c00f9/html5/thumbnails/39.jpg)
AC
CT 2
01 A
CC
T 2
01
AC
CT 2
01
Balance Sheet
A statement showing the balances in asset, liability, and equity accounts at a point in time.
![Page 40: ACCT 201 ACCT 201 ACCT 201 Accounting Information System UAA – ACCT 201 Principles of Financial Accounting Dr. Fred Barbee Chapter 2.](https://reader035.fdocuments.in/reader035/viewer/2022062304/56649cf05503460f949c00f9/html5/thumbnails/40.jpg)
Exh.2.19
![Page 41: ACCT 201 ACCT 201 ACCT 201 Accounting Information System UAA – ACCT 201 Principles of Financial Accounting Dr. Fred Barbee Chapter 2.](https://reader035.fdocuments.in/reader035/viewer/2022062304/56649cf05503460f949c00f9/html5/thumbnails/41.jpg)
AC
CT 2
01 A
CC
T 2
01
AC
CT 2
01
Statement of Cash Flows
A statement showing the sources and uses of funds relating to the
Operating
Investing, and
Financing
Activities of a company.
![Page 42: ACCT 201 ACCT 201 ACCT 201 Accounting Information System UAA – ACCT 201 Principles of Financial Accounting Dr. Fred Barbee Chapter 2.](https://reader035.fdocuments.in/reader035/viewer/2022062304/56649cf05503460f949c00f9/html5/thumbnails/42.jpg)
Exh.2.19
![Page 43: ACCT 201 ACCT 201 ACCT 201 Accounting Information System UAA – ACCT 201 Principles of Financial Accounting Dr. Fred Barbee Chapter 2.](https://reader035.fdocuments.in/reader035/viewer/2022062304/56649cf05503460f949c00f9/html5/thumbnails/43.jpg)
Generally, dollar signs ($) are not used in the journals
or ledgers.
Generally, dollar signs ($) are not used in the journals
or ledgers.
RoundingRoundingRound numbers in
financial statements to the nearest dollar.
Round numbers in financial statements to the
nearest dollar.
ACCOUNT NAME: ACCOUNT No.
Date Description PR Debit Credit Balance
Formatting Conventions
![Page 44: ACCT 201 ACCT 201 ACCT 201 Accounting Information System UAA – ACCT 201 Principles of Financial Accounting Dr. Fred Barbee Chapter 2.](https://reader035.fdocuments.in/reader035/viewer/2022062304/56649cf05503460f949c00f9/html5/thumbnails/44.jpg)
AC
CT 2
01 A
CC
T 2
01
AC
CT 2
01
Accounting Information System
Text Section:Decision Analysis (p. 70)
Chap
ter 2
![Page 45: ACCT 201 ACCT 201 ACCT 201 Accounting Information System UAA – ACCT 201 Principles of Financial Accounting Dr. Fred Barbee Chapter 2.](https://reader035.fdocuments.in/reader035/viewer/2022062304/56649cf05503460f949c00f9/html5/thumbnails/45.jpg)
AC
CT 2
01 A
CC
T 2
01
AC
CT 2
01
Learning Objective
Analyze the impact of transactions on accounts and financial statements.
A2
Analytical
![Page 46: ACCT 201 ACCT 201 ACCT 201 Accounting Information System UAA – ACCT 201 Principles of Financial Accounting Dr. Fred Barbee Chapter 2.](https://reader035.fdocuments.in/reader035/viewer/2022062304/56649cf05503460f949c00f9/html5/thumbnails/46.jpg)
AC
CT 2
01 A
CC
T 2
01
AC
CT 2
01
Learning Objective
Compute return on equity and use it to analyze company performance.
A3
Analytical
![Page 47: ACCT 201 ACCT 201 ACCT 201 Accounting Information System UAA – ACCT 201 Principles of Financial Accounting Dr. Fred Barbee Chapter 2.](https://reader035.fdocuments.in/reader035/viewer/2022062304/56649cf05503460f949c00f9/html5/thumbnails/47.jpg)
AC
CT 2
01 A
CC
T 2
01
AC
CT 2
01
Describes the relationship between net income for the period and average equity.
Helps an owner judge the compnay’s profitability compared to other business or personal opportunities.
Using the Information - Return on Equity
![Page 48: ACCT 201 ACCT 201 ACCT 201 Accounting Information System UAA – ACCT 201 Principles of Financial Accounting Dr. Fred Barbee Chapter 2.](https://reader035.fdocuments.in/reader035/viewer/2022062304/56649cf05503460f949c00f9/html5/thumbnails/48.jpg)
AC
CT 2
01 A
CC
T 2
01
AC
CT 2
01
Learning Objective
Compute the debt ratio and describe its use in analyzing company performance.
A4
Analytical
![Page 49: ACCT 201 ACCT 201 ACCT 201 Accounting Information System UAA – ACCT 201 Principles of Financial Accounting Dr. Fred Barbee Chapter 2.](https://reader035.fdocuments.in/reader035/viewer/2022062304/56649cf05503460f949c00f9/html5/thumbnails/49.jpg)
The EndThe End