tailieunhanh - Lecture Financial accounting (15/e) - Chapter 3: The accounting cycle - Capturing economic events

In this chapter, students will be able to understand: Identify the steps in the accounting cycle and discuss the role of accounting records in an organization, describe a ledger account and a ledger, understand how balance sheet accounts are increased or decreased, explain the double-entry system of accounting,. | The Accounting Cycle Capturing Economic Events Chapter 3 Chapter 3: The Accounting Cycle—Capturing Economic Events The Ledger The entire group of accounts is kept together in an accounting record called a ledger. Cash Accounts Payable Capital Stock Accounts are individual records showing increases and decreases. An account is an individual record showing increases and decreases in the balance. Think of a checkbook as an account. In it, cash receipts and disbursements are maintained, in chronological order, as well as the current account balance. The entire group of accounts for a particular business is called the ledger. The Use of Accounts Increases are recorded on one side of the T account, and decreases are recorded on the other side. Left or Debit Side Right or Credit Side Title of Account Accountants often use a T account to represent a general ledger account. It is a quick way to analyze transactions before entering information in the journal. The left side of a T account is always called the debit side, and the right side is always called the credit side. This terminology comes from the time when the double-entry system was first developed. These terms are still used as a matter of convention. The words do not have any significant meaning other than they stand for the left and right side of a ledger account. Increases and decreases in an account balance are handled differently, depending upon the nature of the account. A = L + OE ASSETS Debit for Increase Credit for Decrease EQUITIES Debit for Decrease Credit for Increase LIABILITIES Debit for Decrease Credit for Increase Debits and credits affect accounts as follows: Debit and Credit Entries To review, the left side of a ledger account is always called the debit, and the right side is always called the credit. Now, let’s move on to the mathematics of the double-entry system. Liabilities and equity have the opposite sign of assets. If liabilities were to move to the left side of the equation, it would . | The Accounting Cycle Capturing Economic Events Chapter 3 Chapter 3: The Accounting Cycle—Capturing Economic Events The Ledger The entire group of accounts is kept together in an accounting record called a ledger. Cash Accounts Payable Capital Stock Accounts are individual records showing increases and decreases. An account is an individual record showing increases and decreases in the balance. Think of a checkbook as an account. In it, cash receipts and disbursements are maintained, in chronological order, as well as the current account balance. The entire group of accounts for a particular business is called the ledger. The Use of Accounts Increases are recorded on one side of the T account, and decreases are recorded on the other side. Left or Debit Side Right or Credit Side Title of Account Accountants often use a T account to represent a general ledger account. It is a quick way to analyze transactions before entering information in the journal. The left side of a T account is .