Bài giảng Kế toán, kiểm toán - Chapter 4: The bookkeeping process and transaction analysis

© 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.Chapter 4The Bookkeeping Process and Transaction AnalysisPowerPoint Authors: Susan Coomer Galbreath, Ph.D., CPA Charles W. Caldwell, D.B.A., CMA Jon A. Booker, Ph.D., CPA, CIA Cynthia J. Rooney, Ph.D., CPAThe Balance Sheet Equation—A Mechanical KeyA = L + SEA = L + PIC + REBEG + R - EThe basic accounting equation can be expanded to include revenues and expenses.LO 14-3TransactionsThe stockholders invested $2,000.The company borrowed $6,000 from a bank.Equipment costing $10,000 was purchased for $2,000 cash and signing a note payable for $8,000.Equipment that cost $3,000 was sold for $3,000. The $3,000 will be received within 30 days.The company provided services for $8,000 and received cash.Wages of $2,000 were paid in cash. LO 2The Balance Sheet Equation4-4 LO 3The Balance Sheet Equation4-5Bookkeeping JargonTransactions are initially recorded in a journal.CashEquipmentInventoryNotes PayableTransactions are then recorded—posted to—individual accounts in the ledger.Accounts are used to organize or group transactions to facilitate financial statement preparation.LO 44-6 The left side of the T-account is always the debit side.Account NameLeftRightDebit The right side of the T-account is always the credit side.CreditLO 4T-Account4-7Debits and CreditsASSETSDebit for IncreaseCredit for DecreaseEQUITIES Debit for DecreaseCredit for IncreaseLIABILITIES Debit for DecreaseCredit for IncreaseDebits and credits affect the accounting equation as follows:A = L + SELO 44-8ASSETSDebit for IncreaseCredit for DecreaseEQUITIES Debit for DecreaseCredit for IncreaseLIABILITIES Debit for DecreaseCredit for IncreaseA = L + SEPaid-in capitalRetained earningsRemember that stockholders' equity includes paid-in capital and retained earnings.LO 5Debits and Credits4-9Revenue and ExpensesIncreases in stockholders' equity.Increase with a credit.Decreases in stockholders' equity.Increase with a debit.LO 54-10Debits and CreditsA = L + SELO 54-11Journal Entry FormatA typical journal entry might look like this.LO 54-12Provide a referencedate for each transaction.Debits are recorded first.Credits are indented andrecorded after debits.Total debits must equaltotal credits.A brief description of the transaction to explain the entry.LO 5Journal Entry Format4-13The Bookkeeping ProcessRecorded in the JournalAccount NameDebitCreditPosted to the LedgerTransactionsSource DocumentsLO 54-14Types of Adjusting EntriesThe initial recording of a transaction does not result in assigning revenues to the period in which they were earned or expenses to the period in which they were incurred.Transactions for which cash has NOT yet been received or paid, but the effect of which must be recorded in the accounts in order to accomplish a matching of revenues and expenses.LO 64-15Accruing ExpensesExamples include:Wages and SalariesInterest PayableProperty TaxesHey, when do we get paid?LO 64-16Accruing RevenuesExamples Include:Interest EarnedWork Completed But Not Yet Billed to CustomerLO 64-17Reclassifying Assets to ExpensesAdjusting entries:Prepaid Insurance Insurance ExpenseSupplies Supplies ExpenseAssetsExpensesLO 6End of month adjusting entries4-18Reclassify Liabilities to RevenuesUnearned Revenue RevenueUnearned Rental Revenue Rental RevenueAirline Ticket Advanced Sales Ticket RevenueLiabilitiesRevenuesLO 6End of month adjusting entries4-19Closing the BooksLO 7The closing process simply transfers the year-end balances of all income statement accounts (e.g., revenues, expenses, gains, and losses) to the retained earnings account. 4-20Closing EntriesLO 7Expenses, losses, and dividends decrease retained earnings.Revenues and gains increase retained earnings.4-21End of Chapter 44-22