Financial Accounting ACCT 2401
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This 2 page Class Notes was uploaded by Christa Glover on Sunday October 11, 2015. The Class Notes belongs to ACCT 2401 at East Carolina University taught by Jan Workman in Fall. Since its upload, it has received 37 views. For similar materials see /class/221354/acct-2401-east-carolina-university in Accounting at East Carolina University.
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Date Created: 10/11/15
Chapters 2 Ch 2 9 continues with the transactions then examines real accounting Recall refresh the ow of the transactions 9 but with column for TUE Rev NI 9NITTIUETT Therefore ReV ll TUE ll Remember each asset each liability each OE component is called an account You nd the balance of an account by adding up all the numbers on the left side and get a subtotal add all the numbers on the right side and get another subtotal subtract the 2 subtotals and the difference is the balance of the account and it sits on the side of the acct left or right that had the largest subtotal see example on page 52 each account can be added to or subtracted from all accounts create the chart of accounts to avoid haVing to have huge worksheets e g adding columns etc we use journal entries to record the transaction After the journals are recorded they are posted to the ledger The balance from each accounts ledger becomes part of the trial balance We diVide each account with 2 components sides left or right debit or credit double entry bookkeeping Rule for double entry accounting DebitsCredits Illustrative T acc0unt FORGET what you thought you already know about debit and credit especially as it pertains to your bank account Debit means LEFT and Credit means Right Rules for accounts 1 To increase any account you enter the amount of the increase on the same side as the normal balance 2 To decrease any account you enter the amount of the decrease on the opposite side of the account s normal balance So debits nor credits are always increase nor decreases because it depends what type of account you are referring to Asset Liability or Owner s Equity Debit Credit DC 9 Washington DC where the money is l All accounts have Beginning balance increases Via debits or decreases credits End Balance This is the way the accounting equation balances Normal Debit Balances increases w debit decreases w credit Assets Expenses DiVidends Normal Credit Balances increases w credit decreases w debit Liabilities OE Revenues Now Journal Entries 9 39 39 39 record of economic transactions EVERY TRANSACTION WILL AFFECT ATLEAST TWO ACCOUNTS AND DEBITS MUST ALWAYS EQUAL CREDITS Date Q g l 6 Cash 20000 9 Common Stock 20000 To record issuance of stock to owner Once entries are journalized we then post transactions to the ledger a grouping of accounts Look at the illustrative problem on pages 7984 for example of journal entries and posting to the ledger accounts From the ledger 7 you prepare the trial balance then the nancial statements Summary Journal 7 1st chronological record of transactions Ledger 7 posts from journal to ledger groups of all accounts with balances Trial Balance 7 all accounts assets 7 SE 7 listed together debits must credits Financial statements 7 prepared from Trial Balance 7 Balance Sheet Income Statement Statement of Retained Earnings Statement of Cash Flows
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