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© PHI Learning, 2008. All rights reserved.1 Financial Accounting: A Managerial Perspective Third Edition Prepared by R. Narayanaswamy Indian Institute of Management Bangalore
© PHI Learning, 2008. All rights reserved.2 Processing Transactions Chapter 2
© PHI Learning, 2008. All rights reserved.3 Accounts Account An individual record of increases and decreases in an item that is likely to be of interest or importance Ledger Chart of accounts Examples: Cash, Office Equipment, Income Tax Payable, Sales, Salaries Expense Chapter 2
© PHI Learning, 2008. All rights reserved.4 Classification of Accounts Asset accounts Examples: Land; Buildings; Equipment; Debtors; Cash Liability accounts Examples: Creditors; Unearned Revenue; Wages Payable Equity accounts Examples: Share Capital; Retained Earnings; Sales; Salaries Expense; Drawings; Dividends Chapter 2
© PHI Learning, 2008. All rights reserved.5 The Double Entry System The T account Credit = Right Debits = Credits Chapter 2 Debit = Left
© PHI Learning, 2008. All rights reserved.6 The Accounting Equation Revisited Chapter 2 The equation, Assets = Liabilities + Equity can be rewritten as Assets = Liabilities + Capital + Revenues – Expenses – Drawings – Dividends which can be further rewritten as Assets + Expenses + Drawings + Dividends = Liabilities + Capital + Revenues
© PHI Learning, 2008. All rights reserved.7 Debit and Credit Rules Chapter 2
© PHI Learning, 2008. All rights reserved.8 Accounting Records The Journal (or Day Book) Chronological record General journal and special journals Ledger Classification of transactions Posting T account and standard form Chapter 2
© PHI Learning, 2008. All rights reserved.9 Trial Balance Can I trust my trial balance? Do Debits = Credits ? Trial balance is not an accounting record Chapter 2 Locating errors Correcting errors
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Financial and Managerial Accounting Wild, Shaw, and Chiappetta Fourth Edition Wild, Shaw, and Chiappetta Fourth Edition McGraw-Hill/Irwin Copyright © 2011.
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© Prentice-Hall of India Private Limited, All rights reserved.1 Financial Accounting: A Managerial Perspective Second Edition Prepared by R. Narayanaswamy.
Financial Accounting. Accounting Measures Processes Communicates…… Financial information to decision makers.
Basics of Accounting. Accounting has 3 main activities 1. Identifying select events that are evidence of economic activity 2. Recording provide a.
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©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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McGraw-Hill/Irwin © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved. McGraw-Hill/Irwin.
C2 - 1 Learning Objectives 1.Usefulness of an Account 2.Characteristics of an Account 3.Analyzing and Summarizing Transactions 4.Illustration of Analyzing.
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COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
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