1. Brief of chapter 1, 2, 3, 4
Sania Wadud

2. Basic Accounting Rule Basic Equation:
Assets = Liabilities + Owner’s Equity
Expanded Equation:
Assets= Liabilities + Owner’s Capital – Owner’s Drawings + Revenues - Expenses

3. Golden Accounting Rule
Accounts
Personal
Dr: Receiver
Cr: Giver
Real
Cr: What goes out
Dr. What come in
Nominal
Cr: Income, Profit & gains
Dr: Expense & Losses

4. Steps Recording a Business Transaction
1. Analyze the financial event.
Identify the accounts affected.
Classify the accounts affected.
Determine the amount of increase or decrease for each account affected.

5. Steps 2. Apply the rules of debit and credit.
Which account is debited? For what amount?
Which account is credited? For what amount?
3. Make the entry in T-account form.
4. Record the complete entry in general journal form.

6. Steps Post the data about transactions
A ledger (or General Ledger) is the record of final entry. It is the last place that accounting transactions are recorded.
The ledger contains a separate form for each account.
Next step of the accounting cycle is posting to the ledger.
Posting is the process of transferring data from a journal to a ledger.

7. Worksheet
The worksheet is a form used to gather all data needed at the end of an accounting period to prepare financial statements

8. Complete the Trial Balance section in four steps
Enter the general ledger account names.
Transfer the general ledger account balances to the Debit and Credit columns of the Trial Balance section.
Total the Debit and Credit columns to prove that the trial balance is in balance.
Place a double rule under each Trial Balance column to show that the work in that column is complete.

9. Adjusting Entries Deferrals: To defer means to postpone or delay.
Prepaid Expenses: Expenses paid in cash before they are used
or consumed
Unearned Revenues. Cash received before services are
performed.
Accruals: Something that accumulates or increases.
Accrued Revenues. Revenues for services performed but not
yet received in cash or recorded
Accrued Expenses. Expenses incurred but not yet paid in
cash or recorded.

10. Summary of Basic Relationships

11. Financial Statements
Financial Statements are prepared directly from the Adjusted Trial Balance
Income Statements:
Lists revenues first, followed by expenses. Shows net income (or net loss).
Owner’s Equity Statement:
Reports the changes in owner’s equity for a specific period of time.
Balance Sheet:
Lists assets at the top, followed by liabilities and owner’s equity.

12. Accounting Cycle