ACT 205 - During The Accounting Cycle
ACT 205 - During The Accounting Cycle ACT 205
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This 3 page Class Notes was uploaded by zaadams Notetaker on Wednesday September 14, 2016. The Class Notes belongs to ACT 205 at Colorado State University taught by Sally Plasterer Whitney in Fall 2016. Since its upload, it has received 2 views.
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Date Created: 09/14/16
Week 3: Accounting 205 – Sally Whitney Types of Accounting • Computerized o Most common o Fast and accurate • Manual o Model for the computerized system Accounting Cycle • Procedures to measure and communicate accounting data Measuring External Transactions 1. Use source documents (electric bill or invoice) 2. Analyze the impact of the transaction on the accounting equation 3. Assess whether the transaction results in a debit or credit 4. Record the transaction 5. Post the transaction to the T-Chart Accounting Cycle Continued • The accounting balance must always be in balance • Stockholders equity is increased by retained earnings • Retained earnings is increased by net income • Net income is increased by revenues • Debit means left • Credit means right Type of Account Debit Credit Asset Increase Decrease Liability Decrease Increase SE Decrease Increase Revenues Decrease Increase Expenses Increase Decrease Dividends Increase Decrease Debits increase Expenses Assets Dividends Credits increase Revenues Liabilities Stockholders Equity • Normal Balance of an account is the side that increases it • Every journal entry has to have an equal debit credit dollar o Debit account name is always listed first • We want the debits to equal the credits Trial Balance • a list of all accounts and their balances, not published to the public. 1. Assets 2. Liabilities 3. stockholders’ equity 4. dividends 5. revenues 6. expenses 2 Chapter 2 Take Away • Transaction Analysis o Be able to determine the accounts that are being affected and the impact on the accounting cycle • Debit Credit Rules o Know what increases and decreases an account o Know each accounts “normal balance” • Journal Entries o Be able to prepare, in proper form, journal entries for various transactions • Posting and Initial Trial Balance o Post journal entries to t-accounts, compute ending balance, and prepare an initial trial balance 3
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