good morning!!. reminder: a business transaction is anytime that an exchange of value happens...
TRANSCRIPT
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GOOD MORNING!!
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Reminder: A business transaction is anytime that an exchange of value happens within the normal operation of a businessEvery transaction must be recordedEvery transaction affects at least two
accounts Up to now:
We have been using T-AccountsDebits = Credits
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The owner invests $20 000 into the business
Cash T. Rantula, Capital
20 000 20 000
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The concepts of “T-Accounts” remainDebits = CreditsAt least two accounts are affected
But rather than entering transactions into the T-Accounts immediately, we use the General Journal
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Your personal diary
The textbook says:“The journal records all parts of a
transaction in one place. The date, the debit, the credit and an explanation for each transaction are recorded together.”
Can record manually or electronically
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Think of the stereotypical girl that enters her thoughts into a journal every night before bed
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The accountant loves to get his/her thoughts and feelings (transactions) into his/her journal as soon as something happens within the business.
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ADVANTAGESThe complete transaction is recorded in one
placeReduces Errors
Easier to make a mistake in T-Accounts (Debit but no credit, only one account, etc)
Transactions are listed in chronological order
Shows a picture of every day at the business
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This unit is all about the different steps of the accounting cycle
The accounting cycle is the process an accountant goes though during a fiscal periodsBegins with a business transactionEnds with the preparation of the Financial
Statements & Closing Entries
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Date
Particulars
Pr
DR CR
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Summarize each transaction with words and as short as possibleExample: Owner invested cashExample: Made cash sale of ticketsExample: Bought equipment on account
THIS IS A MUST FOR EACH AND EVERY TRANSACTION!
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An increase in amount:
Debit Credit
Assets
Drawings
Expenses
Liabilities
Owner’s Equity
Revenue
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A decrease in amount:
Debit Credit
Liabilities
Owner’s Capital
Revenue
Assets
Drawings
Expenses
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Account DEBIT CREDIT
Assets
Liabilities
Owner’s Equity
Drawings
Revenues
Expenses
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On October 1st the owner, T. Rantula invests $20 000 into the business
On October 4th the business sold $16 000 worth of tickets
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Date Particulars Pr
DR CR
Oct
1 Cash 20
0 0 0 00
T. Rantula, Capital
20 0 0 0 00
Invested additional cash
4 Cash 16
0 0 0 00
Ticket Sales 16 0 0 0 00
Ticket sales for the week
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