Introduction to Financial

Accounting

Horngren | Sundem | Elliott | Philbrick

Documenting Transactions

11e

Chapter several

Learning Targets

Use double-entry accounting

2 . Describe the five measures in the

saving process

three or more. Analyze and journalize

deals and content journal

entries to the ledgers

4. Put together and use a trial balance

1 .

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3-2

Learning Aims

Close earnings and expenditure

accounts and update retained

profits

6. Right erroneous journal entries

and describe just how errors have an effect on

accounts

7. Explain just how computers have

transformed the processing of

accounting info

5.

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3-3

Learning Target 1

Employ Double-Entry Accounting

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The Double-Entry

Accounting Program

LO-1

Method followed pertaining to recording

deals, whereby every single transaction

impacts at least two accounts

пЃ± Accountancy firm analyze every single transaction

to determine:

пЃ±

 Which accounts it influences

 Whether to increase or perhaps decrease the

bills

 How much each harmony will change

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3-5

The Double-Entry

Accounting System

пЃ±

LO-1

Transactions are recorded in:

 Basic Journal: Chronological record of

an organization's transactions and just how

each transaction affects the balances in

particular accounts

 General Ledger: Assortment of all ledger

accounts that supports an organization's

economic statements

 Ledger bank account: Listing of all of the

increases and reduces in a particular

account

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3-6

General Ledger: TAccount

Device used to show individual

journal accounts inside the general

ledger

пЃ± Each T-account usually takes the form of

the capital notification T and represents

an individual journal account

пЃ± Transactions impacting a particular

ledger account will be accumulated

in this article

LO-1

пЃ±

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3-7

General Ledger: TAccount

LO-1

Property increase on the left side of the

T-account and decrease on the right

side

пЃ± Liabilities and owners' equity accounts

increase for the right side of the Taccount and decrease on the left side пЃ±

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3-8

General Journal: TAccount

пЃ±

LO-1

Harmony: Net result of all activity

that has been recorded in an consideration

as of a specific point in time

 In a T-account, it is the big difference

between the total left-side and rightside portions

 The balance in a journal account with the

end in the period is definitely computed since:

пЃ±

Starting balance + Amount of increases –

Amount of decreases

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3-9

LO-1

General Ledger

In the double-entry program, every

deal affects by least two accounts

пЃ± After every single transaction, the total amount sheet

equation must always continue in balance

пЃ±

пЃ±

Resources = Financial obligations + Stockholders' Equity

The process of creating a fresh T-account

in preparation pertaining to recording a transaction

is called opening the account

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3-10

Recording Deals

in T-Accounts

LO-1

1 ) Initial expense by owners, $400, 000

cash

 Analysis

пЃ±

пЃ±

The asset Cash increases

The stockholders' value Paid-in Capital

increases

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3-11

Recording Ventures

in T-Accounts

2 .

LO-1

Loan from bank, $22.99, 000

 Analysis

пЃ±

пЃ±

The asset Money increases

The liability Note Payable increases

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3-12

Recording Transactions

in T-Accounts

3....

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