02 - 02 - Chapter 2 (Student).ppt 2 (Student)

8/10/2019 02 - 02 - Chapter 2 (Student).ppt 2 (Student)

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Chapter 2

Copyright 2014 Pearson Canada Inc. 2 - 1


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Objectiv

e

1 Defne and use accounting terms

2 Apply the rules o debit and credit

3 Analyze and record transactions in the journal

4 Post rom the journal tor the ledger

5 Prepare and use a trial balance

6 Apply IFRS to recording business transactions


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Define and use key accounting terms

What are the key terms used hen recording transactions!

Copyright 2014 Pearson Canada Inc. 2 - "


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1. Identify and ana#y$e transactions

2. %ecord transactions in a &ourna#

". Post 'copy( from the &ourna# to the accounts in the

#edger4. Prepare the tria# )a#ance

*. +ourna#i$e and post ad&usting entries

,. Prepare the financia# statements

. +ourna#i$e and post the c#osing entries

. Prepare the postc#osing tria# )a#ance



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http://www.proego!enes.co!/i!g/the-acco"nting-cyce-3.#pg


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/he account is the detai#ed record of the changes thathae occurred in a particu#ar

sset

3ia)i#ity

Item of ner5s 67uity

Copyright 2014 Pearson Canada Inc. 2 - ,


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ccountants record transactions in ajournal /his is the chrono#ogica# record of transactions /he information is then posted(copied) to indiidua#

accounts

+ourna# Page 1

Copyright 2014 Pearson Canada Inc. 2 -

Date Accounts and Explanations PostRef.

Debit Credit

pr. 2 Cash 2*08000 3isa 9unter8 Capita# 2*08000

%eceied initia# inestmentfrom oner.


8/49Copyright 2014 Pearson Canada Inc. 2 -

Cash

$cco"ntsPaya%e

&isa '"nter(Capita

&edger

Individual assetaccounts

Individual liabilityaccounts

Individual oner!s e"uityaccounts

All the accountscombined ma#eup the ledger


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ssets are economic resources that i## )enefit the)usiness in the future.

ssets inc#ude Cash

ccounts receia)#e :otes receia)#e

Prepaid e;penses

3and


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3ia)i#ities are de)ts incurred )y the )usiness 3ia)i#ities inc#ude


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Account $alance Sheet

%urrent portion & ' ( yr)

$an# *oan = +*ong+term portion &, ( yr)

Copyright 2011Pearson Canada

Inc.

2 -11

Correction: page 62 o) yo"r te*t:

-his is incorrect


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/he oner5s c#aims to the assets of a )usiness ner5s e7uity inc#udes

Capita#

Withdraa#s

%eenues

6;penses



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Items a.ecting the %apital Account

%apital

account&ending

balance)

Copyright 2014 Pearson Canada Inc. 2 - 1"

+eginning Capita

, Inest!ents

, et Inco!e reen"es e*penses

et oss e*penses reen"es

ithdrawas


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*ists all accounts/ In many cases0 theaccount names are listed along ith theaccount numbers/

1ne e2ample has assets begin ith (3330liabilities ith 43330 oner!s e"uity ith53330 revenues ith 63330 and e2penses

ith 7333



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Copyright 2014 Pearson Canada Inc. 2 - 1*

Assets

1100 Cash1200 $cco"nts eceia%e

1400 ))ice "ppies1500 ))ice 7"rnit"re1800 &and

Liabilities

2100 $cco"nts Paya%e2300 otes Paya%e

Owners Equity

3000 &isa '"nter( Capita3100 &isa '"nter( ithdrawas

Revenue Expenses

4000 erice een"e 5100 ent 9*pense5200 aary 9*pense5300 tiities 9*pense

Inco!e tate!ent$cco"nts part o)owner;s e


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pp#y the ru#es of de)it and credit

9o do e track changes in accounts!

Copyright 2014 Pearson Canada Inc. 2 - 1,


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Dou)#e entry accounting ? dua# 'or to( effects of eachtransaction8 the receiing side and the giing side

6ach transaction affects at least two accounts

/he oner inests @2*08000 into a ne )usiness AA6/A ? 3I250(000 o)owner;s e


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Credit purchase of a truck for @*08000

AA6/A ? 3I


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Copyright 2014 Pearson Canada Inc. 2 - 1>

$cco"nt =ite

@e%it

LEFT

SIE

Credit

RI!"T

SIE


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$ssets &ia%iities and wner;s 9


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Debit8%redit song

Copyright 2011Pearson Canada

Inc.

2 -21
http://www.youtube.com/watch?v=j71Kmxv7smkhttp://www.youtube.com/watch?v=j71Kmxv7smk


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$9=

@9+I=

&I$+I&I=I9 9; 9BI=

C9@I=

@e%it,

@e%it

@e%it

Credit

Credit,

Credit,

9 :

9

TOTAL E#ITS $%ST E&%AL TOTAL CREITS


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3isa 9unter inested @2*08000 cash to start her

)usiness

ssets ? 3ia)i#ities B ner5 67uity

Copyright 2014 Pearson Canada Inc. 2 - 2"

Cash &. '"nter( Capita

@e%it )or

increase(>250(000

Credit )or

increase(>250(000


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3isa 9unter inested @2*08000 cash to )egin 96A @1008000 cash purchase of #and

ssets ? 3ia)i#ities B ner5 67uity


Cash &. '"nter( Capita

250(000250(000

100(000

&and

100(000

+aance

150(000


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$ssets

&ia%iities

wner;s 9


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/he norma# )a#ance for asset accounts ? de)it /he norma# )a#ance for #ia)i#ity accounts ? credit /he norma# )a#ance for capita# accounts ? credit

/he norma# )a#ance for reenue accounts ? credit /he norma# )a#ance for e;pense accounts ? de)it /he norma# )a#ance for ithdraa# accounts ? de)it



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na#y$e and record transactions in the

&ourna#

9o do e record )usiness transactions!



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Aource documents are the eidence of transactions

+ourna#i$ing a transaction is the chrono#ogica# record of

the entity5s transaction

What are some examples of source documents?



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Process of &ourna#i$ing transactions is as fo##os

1. Identify the transaction from the source document

2. Identify each account affected )y the transaction

". pp#y the ru#es of de)it and credit

4. %ecord the transaction in the &ourna# ith an e;p#anation or

description

Copyright 2014 Pearson Canada Inc. 2 - 2>


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/he date of the transaction /he tit#e of the account de)ited8 a#ong ith the do##ar

amount

/it#e of the account credited8 a#ong ith the do##aramount short e;p#anation of the transaction

Copyright 2014 Pearson Canada Inc. 2 - "0


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+ourna# Page 1


Insert the edger acco"nt inthe #o"rna

Date Accounts and Explanations PostRef.

Debit Credit

pr. 2 Cash 2*08000

3isa 9unter8 Capita# 2*08000

%eceied initia# inestmentfrom oner.


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-aylor ;o.at opened a veterinary practice/Record the olloing transactions &ithe2planations)


Sept ( ;o.at invested


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Date Account ame B Description Debit %redit



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Post from the &ourna# to the #edger

What is the ne;t step in recording a transaction!



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Posting is the transferring of the data from the &ourna#

to the #edger

Copyright 2014 Pearson Canada Inc. 2 - "*


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ccount Cash

ccount 3isa 9unter8 Capita#

Copyright 2014 Pearson Canada Inc. 2 - ",Insert the #o"rna page n"!%er

Date Item Jrnl.Ref.

Debit Credit Balance

2014

pr. 2 2*08000 2*08000 Dr.

Date Item Jrnl.Ref.

Debit Credit Balance

2014

pr. 2 2*08000 2*08000 Cr


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sing the inormation rom the journalentries you did or ;o.at in September0post those to the ledger/

Copyright 2011 Pearson Canada Inc. 2 - 3D

Account: Cash Account No.


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Copyright 2011 Pearson Canada Inc. 2 - 3E

1000

Date Item Re Debit %redit $alance

Account: Capital, Mofat Account No.

3000


Account: Supplies

Account No. 1500


Account: Accounts Payable

Account No. 2000


Account: Rent Expense Account No.

5500


Account: Accounts Receivable Account No.

1300Date Item Re Debit %redit $alance

Account: RevenueAccount No.000



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-here are templates on myDouglas or thejournal0 ledger0 and -$/ Print a e or henyou are doing "uestions to save yoursel

time and hassle/



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Prepare and use a tria# )a#ance

9o can e check if the records are in )a#ance!



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tria# )a#ance summari$es the #edger )y #isting a##accounts ith their )a#ances


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/ria#


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o use the inormation rom the ledgerthat you created or ;o.at to ma#e a trialbalance/

Does it balanceE



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Mofat Vet Practice

-rial $alance

September 50 43(6AcctNo.

Account Name Debit Credit

Total



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If your /ria#



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pp#y internationa# financia# reportingstandards 'I=%A( to recording )usiness

transactions

9o does I=%A app#y to transactions!



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-he procedures that identiy and recordbusiness transactions described previouslyare olloed by companies that report theirresults using international fnancialreporting standards &IFRS) and those usingaccounting standards or private enterprises&ASP)/

All companies must ensure that debits andcredits are e"ual or all transactions/



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Accounting terms

Debits and credits (and a catchy song)

Recording journal entries0 and posting to

the ledger

-rial balances

Copyright 2011 Pearson Canada Inc. 2 - 4E


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Print %hapter 5 poerpoints or ne2t class

Gour frst "uiz is on Hanuary (? &practice "uestions rom te2t)

%hapter 4 homeor# is due on Hanuary (=

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02 - 02 - Chapter 2 (Student).ppt 2 (Student)

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