New User Special Price Expires in

Let's log you in.

Sign in with Facebook


Don't have a StudySoup account? Create one here!


Create a StudySoup account

Be part of our community, it's free to join!

Sign up with Facebook


Create your account
By creating an account you agree to StudySoup's terms and conditions and privacy policy

Already have a StudySoup account? Login here

Chapter 2 Notes

by: Jayne Johnston

Chapter 2 Notes Financial Accounting

Jayne Johnston
GPA 3.33

Preview These Notes for FREE

Get a free preview of these Notes, just enter your email below.

Unlock Preview
Unlock Preview

Preview these materials now for free

Why put in your email? Get access to more of this material and other relevant free materials for your school

View Preview

About this Document

These class notes cover chapter 2.
Financial Accounting
Raqule Crawley
Class Notes
financial, Accounting
25 ?




Popular in Financial Accounting

Popular in Accounting

This 3 page Class Notes was uploaded by Jayne Johnston on Sunday February 7, 2016. The Class Notes belongs to Financial Accounting at a university taught by Raqule Crawley in Spring 2016. Since its upload, it has received 12 views.

Similar to Financial Accounting at University


Reviews for Chapter 2 Notes


Report this Material


What is Karma?


Karma is the currency of StudySoup.

You can buy or earn more Karma at anytime and redeem it for class notes, study guides, flashcards, and more!

Date Created: 02/07/16
Chapter 2 - Transactions  The Account and Its Analysis An account is a record of increases and decreases in a specific asset, liability, equity, revenue, or expense item.  Asset Accounts  Cash  Accounts Receivable  Notes Receivable  Prepaid Accounts (Prepaid Expense – ex. Magazine subscription)  Supplies  Equipment  Buildings  Land  Liability Accounts  Notes Payable  Unearned Revenue  Accrued Liabilities  Accounts Payable  Equity Accounts  Dividends  Expenses Retained Earnings on Balance Sheet  Revenues  Common Stock Revenues and owner’s contributions increases equity. Expenses and owner’s withdrawals decreases equity.  Analyzing and Posting Process  The accounting process identifies business transactions and events, analyzes, and records their effects, and summarizes and presents info in reports and financial statements. These reports and statements are used for making investment lending, and other business decisions.  Analyze each transaction and event from source documents   Record relevant transactions and events in a journal   Post journal information to ledger accounts   Prepare and analyze the trail balance  Source Documents  Employee Earnings Records  Checks  Bills from Supplies  Purchase Orders  Bank Statements  Sales Tickets  Need-To-Know  Prepaid rent A Chapter 2 - Transactions  Common Stock EQ  Note Receivable A  Accounts Payable L  Accounts Receivable A  Equipment A  Interest Payable L  Unearned Revenue L  Land A  Prepaid Insurance A  Ledger and Chart of Accounts  The ledger is a collection of all accounts for an information system. A company’ size and diversity of operations affect the number of accounts needed.  The chart of accounts is a list of all accounts and includes an identifying number for each account.  Debits and Credits * T-account 2 ndmost important accounting aspects.  A T-account represents a ledger account and is a tool used to understand the effects of one or more transaction. Account Title (left) (right) Debit Credit Dr. Cr. Balance  Double-Entry Accounting  An account balance is the difference between the increases and decreases in an account. Notice the T-Account. Rules   At least two accounts involved in every transaction – with at least one debit and one credit.  Total debit = Total credit  The balance will go on the normal side of the account.  Need-To-Know (Debit or Credit)  Prepaid Rent D  Common Stock C  Note Receivable D  Accounts Payable C  Accounts Receivable D  Equipment D  Interest Payable C  Unearned Revenue C  Land D  Prepaid Insurance D  Journalizing Transactions Chapter 2 - Transactions  4 components  Transaction Date  Titles of Affected Accounts  Dollar amount of debits and credits (debit always comes first)  Transaction explanation – No negative signs or parentheses in journal entries, just need to know the increase or decrease with each account  Balance Account Column  T-accounts are useful illustrations, but balance column ledger accounts are used in practice.  Preparing the Trial Balance  …  Searching for and Correcting Errors  If the trial balance does not balance, the error(s) must be found and corrected.  Make sure the trial balance columns are correctly added.  Make sure account balances are correctly entered from the ledger.  See if the debit or credit accounts are mistakenly placed on the trial balance.  Re-compute each account balance in the ledger.  Verify that each journal entry is posted correctly.  Verify that each original journal entry has equal debits and credits. - If the CEO asks to see accounting info, which would be the best to provide? Trial Balance.  Debt Ratio  Evaluates the level of debt risk.  A higher ratio indicates that there is a greater probability that a company will not be able to pay its debt in the future. Debt Ratio = Total Liabilities / Total Assets


Buy Material

Are you sure you want to buy this material for

25 Karma

Buy Material

BOOM! Enjoy Your Free Notes!

We've added these Notes to your profile, click here to view them now.


You're already Subscribed!

Looks like you've already subscribed to StudySoup, you won't need to purchase another subscription to get this material. To access this material simply click 'View Full Document'

Why people love StudySoup

Jim McGreen Ohio University

"Knowing I can count on the Elite Notetaker in my class allows me to focus on what the professor is saying instead of just scribbling notes the whole time and falling behind."

Amaris Trozzo George Washington University

"I made $350 in just two days after posting my first study guide."

Jim McGreen Ohio University

"Knowing I can count on the Elite Notetaker in my class allows me to focus on what the professor is saying instead of just scribbling notes the whole time and falling behind."


"Their 'Elite Notetakers' are making over $1,200/month in sales by creating high quality content that helps their classmates in a time of need."

Become an Elite Notetaker and start selling your notes online!

Refund Policy


All subscriptions to StudySoup are paid in full at the time of subscribing. To change your credit card information or to cancel your subscription, go to "Edit Settings". All credit card information will be available there. If you should decide to cancel your subscription, it will continue to be valid until the next payment period, as all payments for the current period were made in advance. For special circumstances, please email


StudySoup has more than 1 million course-specific study resources to help students study smarter. If you’re having trouble finding what you’re looking for, our customer support team can help you find what you need! Feel free to contact them here:

Recurring Subscriptions: If you have canceled your recurring subscription on the day of renewal and have not downloaded any documents, you may request a refund by submitting an email to

Satisfaction Guarantee: If you’re not satisfied with your subscription, you can contact us for further help. Contact must be made within 3 business days of your subscription purchase and your refund request will be subject for review.

Please Note: Refunds can never be provided more than 30 days after the initial purchase date regardless of your activity on the site.