1. วัฎจักรทางการบัญชี – ภาคแรก
(THE ACCOUNTING CYCLE 1)
Chapter 4 2

2. THE BASIC ACCOUNTING EQUATION
สมการบัญชี: สินทรัพย์ = หนี้สิน + ส่วนของเจ้าของ
Assets
Liabilities
Stockholders’
Equity = +
resources
owned by
a business
claims
against
those
assets
owners’
residual
claim on
total assets

3. HOW BUSINESS TRANSACTIONS AFFECT THE ACCOUNTING EQUATION
Every transaction must have a dual effect on the accounting equation. Thus, if an asset is increased, there must be a corresponding:
Decrease in another asset, or
Increase in a liability, or
Increase in stockholders’ equity

4. TRANSACTION IDENTIFICATION PROCESS
Purchase computer
Answer telephone
Pay rent
Is the financial position (assets, liabilities, and stockholders’ equity) of the company changed? No
Yes
Don’t Record
Record

5. การวิเคราะห์รายการค้า
Let’s analyze some transactions for JJ’s Lawn Care Service.

6. TRANSACTION ANALYSIS TRANSACTION 1
On May 1, 20XX, Jill Jones and her family invested $8,000
in JJ’s Lawn Care Service and received 800 shares of stock.
Assets ₌
Liabilities ₊
Equity
Cash
A/R Eq
Truck
A/P CS
R/E
(1)
$8,000
The asset Cash is increased $8,000 and the Common Stock is increased $8,000.

7. On May 1, 20XX, Jill Jones and her family invested $8,000 in JJ’s Lawn Care Service and received 800 shares of stock. 3

8. TRANSACTION ANALYSIS TRANSACTION 2
On May 2, JJ’s purchased a riding lawn mower for $2,500 cash.
Assets ₌
Liabilities ₊
Equity
Cash
A/R Eq
Truck
A/P CS
R/E
old Bal
$8,000
(2)
 ($2,500)
 $2,500
New Bal
$5,500
$2,500
The asset Cash is decreased $2,500 and the asset Tool & Equipment is increased $2,500.

9. On May 2, JJ’s purchased a riding lawn mower for $2,500 cash.3

10. TRANSACTION ANALYSIS TRANSACTION 3
On May 8, JJ’s purchased a $15,000 truck.JJ’s paid $2,000 down
in cash and issued a note payable for the remaining $13,000.
Assets ₌
Liabilities ₊
Equity
Cash
A/R Eq
Truck
A/P CS
R/E
old Bal
$5,500
$2,500
$8,000
(3)
New Bal

11. On May 8, JJ’s purchased a $15,000 truck.
JJ’s paid $2,000 down in cash and issued a note payable for the remaining $13,000. 3

12. TRANSACTION ANALYSIS TRANSACTION 4
On May 11, JJ’s purchased some repair parts for $300 on account.
Assets ₌
Liabilities ₊
Equity
Cash
A/R Eq
Truck
A/P CS
R/E
old Bal
(4)
New Bal

13. On May 11, JJ’s purchased some repair parts for $300 on account.

14. TRANSACTION ANALYSIS TRANSACTION 5
On May 18, JJ’s was able to sell half of the repair parts for $150,
a price equal to cost. JJ’s will receive the cash within 30 days.
Assets ₌
Liabilities ₊
Equity
Cash
A/R Eq
Truck
A/P CS
R/E
old Bal
(5)
New Bal

15. Jill realized she had purchased more repair parts than needed.
On May 18, JJ’s was able to sell half of the repair parts to ABC Lawns for $150, a price equal to JJ’s cost. JJ’s will receive the cash within 30 days. 3

16. TRANSACTION ANALYSIS TRANSACTION 6
On May 25, ABC Lawns pays JJ’s $75 as a
partial settlement of its accounts receivable.
Assets ₌
Liabilities ₊
Equity
Cash
A/R Eq
Truck
A/P CS
R/E
old Bal
$3,500
$150
$2,650
$15,000
$13,300
$8,000
(6)
New Bal

17. On May 25, ABC Lawns pays JJ’s $75 as a partial settlement of its accounts receivable.3

18. TRANSACTION ANALYSIS TRANSACTION 7
On May 28, JJ’s pays $150 of its accounts
payable.
Assets ₌
Liabilities ₊
Equity
Cash
A/R Eq
Truck
A/P CS
R/E
old Bal
$3,575
$75
$2,650
$15,000
$13,300
$8,000
(7)
New Bal

19. On May 28, JJ’s pays $150 of its accounts payable.3

20. TRANSACTION ANALYSIS TRANSACTION 8
On May 29, JJ’s recorded lawn care services
provided during May of $750. All clients paid in cash.
Assets ₌
Liabilities ₊
Equity
Cash
A/R Eq
Truck
A/P CS
R/E
old Bal
$3,425
$75
$2,650
$15,000
$13,150
$8,000
(8)
New Bal

21. On May 29, JJ’s recorded lawn care services provided during May of $750. All clients paid in cash.3

22. TRANSACTION ANALYSIS TRANSACTION 9
On May 31, JJ’s purchased gasoline for the lawn
mower and the truck for $50 cash
Assets ₌
Liabilities ₊
Equity
Cash
A/R Eq
Truck
A/P CS
R/E
old Bal
$4,175
$75
$2,650
$15,000
$13,150
$8,000
$750
(9)
New Bal

23. On May 31, JJ’s purchased gasoline for the lawn mower and the truck for $50 cash.

24. May $21, = $21,850 3

25. These transactions impact the Statement of Cash Flows.
Let’s prepare the Income Statement and Statement of Cash Flows for JJ’s Lawn Care Service for the month ending May 31, 20XX.
These transactions impact the Statement of Cash Flows.
These transactions impact the Income Statement. 3

26. Investments by and payments to the owners are not included on the Income Statement.3

27. 3

28. Operating activities include the cash effects of revenue and expense transactions.3

29. Investing activities include the cash effects of purchasing and selling assets.3

30. Accounts are individual records showing increases and decreases.
The Ledger
Accounts are individual records showing increases and decreases.
Cash
Accounts Payable
The entire group of accounts is kept together in an accounting record called a ledger.
Capital Stock

31. Individual Liabilities
THE LEDGER
The general ledger contains all the assets, liabilities, and stockholders’ equity accounts for a given company
Individual Assets
Individual Liabilities
Individual
Stockholders’ Equity
Equipment
Interest Payable
Salaries Payable
Land
Salaries Payable
Fees Earned
Supplies
Accounts Payable
Common Stock
Cash
Notes Payable
Retained Earnings

32. THE ACCOUNT
An account is an individual record of increases and decreases in a specific asset, liability, or owner’s equity item.
Commonly referred to as “T-Accounts.”
Left or debit side
Title of Account
Right or credit side
Debit balance
Credit balance

33. The Use of Accounts
Increases are recorded on one side of the T-account, and decreases are recorded on the other side.
Title of Account
Left or Debit Side
Right or Credit Side

34. Assets Liabilities Equity
DOUBLE-ENTRY SYSTEM
In a double-entry system, equal debits and credits are made in the accounts for each transaction.
Thus, the accounting equation will always stay in balance.
Assets
Liabilities
Equity

35. Debits and credits affect accounts as follows:
Debit and Credit Rules
Debits and credits affect accounts as follows:
A = L + OE
ASSETS
Debit for Increase
Credit for Decrease
LIABILITIES
Debit for Decrease
Credit for Increase
EQUITIES
Debit for Decrease
Credit for Increase 13

36. Double Entry AccountingThe Equality of Debits and Credits
A = L + OE =
Debit balances
Credit balances
In the double-entry accounting system, every transaction is recorded by equal dollar amounts of debits and credits. 13

37. Debits Credits DEBIT & CREDIT EFFECTS ON ASSETS & LIABILITIES
Increase assets Decrease assets
Decrease liabilities Increase liabilities

38. Debits Credits DEBIT & CREDIT EFFECTS ON STOCKHOLDERS’ EQUITY
COMMON STOCK/RETAINED EARNINGS
Debits
Credits
Decrease equity Increase equity

39. A = L + OE What is Net Income?
Net income is not an asset it’s an increase in owners’ equity from profits of the business.
A = L + OE
Increase
Decrease
Increase
Either (or both) of these effects occur as net income is earned . . .
. . . but this is what “net income” really means. 3

40. A = L + OE Retained Earnings Capital Stock Retained Earnings-Revenues
-Expenses
The balance in the Retained Earnings account represents
the total net income of the corporation over the entire lifetime of the business, less all amounts which have been distributed to the stockholders as dividends. 3

41. Debits Credits DEBIT & CREDIT EFFECTS ON REVENUES & EXPENSES
Decrease revenues Increase revenues
Increase expenses Decrease expenses

42. Debits and Credits for Revenue and Expense
Expenses decrease owner’s equity.
Revenues increase owner’s equity.
EQUITIES
Debit for Decrease
Credit for Increase
EXPENSES
Credit for Decrease
Debit for Increase
REVENUES
Debit for Decrease
Credit for Increase

43. Investments by and Payments to Owners
Payments to owners decrease owners’ equity.
Owners’ investments increase owners’ equity.
EQUITIES
Debit for Decrease
Credit for Increase
CAPITAL STOCK
Debit for Decrease
Credit for Increase
DIVIDENDS
Debit for Increase
Credit for Decrease

44. EXPANDED ACCOUNTING EQUATION
Assets
Liabilities
Stockholders’ Equity = +
Assets
Dr.
Cr.
Liabilities
Dr.
Cr.
Dr.
Cr.
Common Stock
Dr.
Cr.
Dividends = + -
Dr.
Cr.
Revenues
Dr.
Cr.
Expenses + -

45. CHART OF ACCOUNTS
Most companies have a chart of accounts that lists the accounts and the account numbers which identify their location in the ledger.

46. Chart of Account ผังบัญชี : ตัวอย่าง สินทรัพย์ เลขประจำกลุ่มเป็นเลข 1
หนี้สิน เลขประจำกลุ่มเป็นเลข 2
ส่วนของเจ้าของ เลขประจำกลุ่มเป็นเลข 3
รายได้ เลขประจำกลุ่มเป็นเลข 4
ค่าใช้จ่าย เลขประจำกลุ่มเป็นเลข 5

47. CHART OF ACCOUNTS
ตัวอย่างผังบัญชี

48. Let’s record selected transactions for JJ’s Lawn Care Service in the accounts.9

49. Will Capital Stock increase or decrease?
May 1: Jill Jones and her family invested $8,000 in JJ’s Lawn Care Service and received 800 shares of stock.
Will Capital Stock increase or decrease?
Will Cash increase or decrease? 3

50. Cash increases $8,000 with a debit.
May 1: Jill Jones and her family invested $8,000 in JJ’s Lawn Care Service and received 800 shares of stock.
Cash increases $8,000 with a debit.
Capital Stock increases $8,000 with a credit. 3

51. May 2: JJ’s purchased a riding lawn mower for $2,500 cash.
Will Tools & Equipment increase or decrease?
Will Cash increase or decrease? 3

52. May 2: JJ’s purchased a riding lawn mower for $2,500 cash.
Cash decreases $2,500 with a credit.
Tools & Equipment increases $2,500 with a debit. 3

53. Truck increases $15,000 with a debit.
May 8: JJ’s purchased a $15,000 truck. JJ’s paid $2,000 down in cash and issued a note payable for the remaining $13,000.
Truck increases $15,000 with a debit.
Cash decreases $2,000 with a credit. Notes Payable increases $13,000 with a credit. 3

54. May 11: JJ’s purchased some repair parts for $300 on account.
Tools & Equipment increases $300 with a debit.
Accounts Payable increases $300 with a credit. 3

55. Tools & Equipment decreases $150 with a credit.
May 18: JJ’s sold half of the repair parts to ABC Lawns for $150, a price equal to JJ’s cost. ABC Lawns agrees to pay JJ’s within 30 days.
Tools & Equipment decreases $150 with a credit.
Accounts Receivable increases $150 with a debit. 3

56. We will also analyze a dividend transaction.
Let’s analyze the revenue, and expense transactions for JJ’s Lawn Care Service for the month of May.
We will also analyze a dividend transaction. 9

57. Cash increases $750 with a debit.
May 29: JJ’s provided lawn care services for a client and received $750 in cash.
Cash increases $750 with a debit.
Sales Revenue increases $750 with a credit. 3

58. Cash decreases $50 with a credit.
May 31: JJ’s purchased gasoline for the lawn mower and the truck for $50 cash.
Cash decreases $50 with a credit.
Gasoline Expense increases $50 with a debit. 3

59. May 31: JJ’s Lawn Care paid Jill Jones and her family a $200 dividend.
Cash decreases $200 with a credit.
Dividends increase $200 with a debit. 3

60. Now, let’s look at the Trial Balance for JJ’s Lawn Care Service for the month of May.9

61. Proves equality of debits and credits.
All balances are taken from the ledger accounts on May 31 after considering all of JJ’s transactions for the month.
Proves equality of debits and credits. 4

62. Understanding the Recording Process
JOURNAL
JOURNAL
LEDGER
1. Analyze each transaction
2. Enter transactions in a journal
3. Transfer journal information to the ledgers

63. JOURNALS
Transactions are initially recorded in chronological order in a journal before being transferred to the accounts.
The journal records the complete effect of each transactions, making errors easy to locate
Every company has a general journal which contains
Transaction dates
Account titles
References
Two amount columns

64. The Journal 4

65. POSTING
Posting is the process of transferring entries from the journals to specific accounts in the General Ledger
GENERAL LEDGER
GENERAL JOURNAL J1
Date
Account Titles and Explanation
Ref.
Debit
Credit

66. Posting Journal Entries to the Ledger Accounts4

67. Posting Journal Entries to the Ledger Accounts4

68. The Accounting Cycle Journalize transactions.
Post entries to the ledger accounts.
Prepare trial balance.
Make end-of-year adjustments.
Prepare adjusted trial balance.
Prepare financial statements.
Prepare after closing trial balance.
Journalize and post closing entries. 3

69. End of Chapter 4 4