tailieunhanh - Lecture Financial and managerial accounting (2nd Edition): Chapter 2 - Weygandt, Kimmel, Kieso

Chapter 2 - The recording process. After completing this chapter you should be able to: Explain what an account is and how it helps in the recording process; define debits and credits and explain their use in recording business transactions, identify the basic steps in the recording process,. | The Recording Process 2 Learning Objectives Describe how accounts, debits, and credits are used to record business transactions. Indicate how a journal is used in the recording process. Explain how a ledger and posting help in the recording process. 3 Prepare a trial balance. 2 1 4 Record of increases and decreases in a specific asset, liability, stockholders’ equity, revenue, or expense item. Debit = “Left” Credit = “Right” Debits and Credits An account can be illustrated in a T-account form. LEARNING OBJECTIVE Describe how accounts, debits, and credits are used to record business transactions. 1 LO 1 Double-entry system Each transaction must affect two or more accounts to keep the basic accounting equation in balance. Recording done by debiting at least one account and crediting at least one other account. DEBITS must equal CREDITS. DEBIT AND CREDIT PROCEDURES Debits and Credits LO 1 $10,000 Transaction #2 $3,000 8,000 Balance Transaction #1 Transaction #3 If the sum of Debit entries are greater than the sum of Credit entries, the account will have a debit balance. $15,000 Debits and Credits LO 1 If the sum of Credit entries are greater than the sum of Debit entries, the account will have a credit balance. $10,000 Transaction #2 $3,000 8,000 Transaction #3 Balance Transaction #1 $1,000 Debits and Credits LO 1 Assets - Debits should exceed credits. Liabilities – Credits should exceed debits. Normal balance is on the increase side. Debits and Credits LO 1 Owner’s investments and revenues increase stockholders’ equity (credit). Dividends and expenses decrease stockholders’ equity (debit). Debits and Credits LO 1 The purpose of earning revenues is to benefit the stockholders. The effect of debits and credits on revenue accounts is the same as their effect on stockholders’ equity. Expenses have the opposite effect: expenses decrease stockholders’ equity. Debits and Credits LO 1 Normal Balance Credit Normal Balance Debit Debits and Credits LO 1 Balance Sheet Income . | The Recording Process 2 Learning Objectives Describe how accounts, debits, and credits are used to record business transactions. Indicate how a journal is used in the recording process. Explain how a ledger and posting help in the recording process. 3 Prepare a trial balance. 2 1 4 Record of increases and decreases in a specific asset, liability, stockholders’ equity, revenue, or expense item. Debit = “Left” Credit = “Right” Debits and Credits An account can be illustrated in a T-account form. LEARNING OBJECTIVE Describe how accounts, debits, and credits are used to record business transactions. 1 LO 1 Double-entry system Each transaction must affect two or more accounts to keep the basic accounting equation in balance. Recording done by debiting at least one account and crediting at least one other account. DEBITS must equal CREDITS. DEBIT AND CREDIT PROCEDURES Debits and Credits LO 1 $10,000 Transaction #2 $3,000 8,000 Balance Transaction #1 Transaction #3 If the sum of Debit .