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Analyzing & Recording Business Transactions
Chapter 2
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Source documents Identify and describe transactions and events entering the accounting process.
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Account Is a record of increases and decreases in a specific asset, liability, equity, revenue or expense Ledger Is a record containing all accounts used by a company
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Assets Cash Accounts receivable Note receivable Prepaid Accounts
What customers owe us Note receivable Prepaid Accounts Supplies Equipment
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Liabilities Accounts payable Notes payable Unearned revenue
Money owed to suppliers Notes payable Unearned revenue Deposits from customers
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Equity Common Stock Dividends Retained Earnings
Shareholders investment in the business Dividends Distributions of income to shareholders Retained Earnings
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Chart of Accounts List of an accounts a company uses and includes an idea. Assets Liabilities Equity Revenues Expenses
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T- Accounts Debit Credit Right side Left side
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Accounting Equation Assets = Liabilities + Equity DR DR CR DR CR CR
Double entry accounting: each transactions affect, And recorded in, at least two accounts Debits = Credits
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Journal Journal Journalizing Posting
Gives a complete record of each transaction in one place Journalizing Process of recording transactions Posting Process of transferring journal entry info to the ledger
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Journal Date Account PR Debit Credit
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Journal Entries Go to excel worksheet
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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
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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
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Transactions Co receives $3,000 cash in advance
Co pays $2,400 cash for insurance for one year
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Posting to the ledger Record the transactions into ledger by account name Prepare a TRIAL BALANCE List of accounts and balances
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