transactions recording chapter2 b

8/11/2019 Transactions Recording Chapter2 B

1/19

Analyzing & RecordingBusiness Transactions

CHAPTER 2


2/19

The Balance Sheet

The balance sheet equation:

Assets = Liabilities + Owners equityets =

or

+ Owner

s Equity

= Liabilities + Owners Equity


3/19

Balance Sheet Transactions

Just as the balance sheet equationmust always balance, the balance

sheet must also always balance. A balance sheet could be prepared

after every transaction, but this

practice would be awkward andunnecessary.


4/19

Transaction Analysis

Transactions are recorded inaccounts, which are summary

records of the changes in particularassets, liabilities, or owners equity.

The account balance is the total of

all entries to the account.


5/19

Source documents

Identify and describe transactionsand events entering the accounting

process.


6/19

Account

Is a record of increases anddecreases in a specific asset,

liability, equity, revenue or expense Ledger

Is a record containing all accounts used

by a company


7/19

Assets

Cash

Accountsreceivable What customers

owe us

Note receivable

Prepaid Accounts Supplies

Equipment


8/19

Liabilities

Accounts payable

Money owed tosuppliers

Notes payable

Unearned revenue

Deposits from

customers


9/19

Equity

Common Stock

Shareholdersinvestment in thebusiness

Dividends

Distributions of

income toshareholders

Retained Earnings


10/19

Chart of Accounts

List of an accounts a company usesand includes an idea.

101-199 Assets 201-299 Liabilities

301-399 Equity

401-499 Revenues

501-599 Expenses


11/19

T- Accounts

Debit Credit

Left side Right side


12/19

Accounting Equation

Assets =

DR CR

Liabilities

DR CR

+ Equity

DR CR

Double entry accounting: each transactions affect,

And recorded in, at least two accounts

Debits = Credits


13/19

Journal

Journal

Gives a completerecord of eachtransaction in oneplace

Journalizing

Process ofrecordingtransactions

Posting

Process of

transferring journalentry info to theledger


14/19

Journal

Date Account PR Debit Credit


15/19

Journal Entries

Go to excel worksheet


16/19

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


17/19

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


18/19

Transactions

Co receives $3,000 cash in advance

Co pays $2,400 cash for insurance

for one year


19/19

Posting to the ledger

Record the transactions into ledgerby account name

Prepare a TRIAL BALANCE List of accounts and balances

transactions recording chapter2 b

Documents