Chapter 2 Lectures Notes

.docx
Chapter 2 - The Recording Process The Account is a detailed record of the changes that have occurred for a particular asset, liability or item of owner's equity during a period of time accounts are grouped together in a record called the ledger : The Ledger "book of accounts", the accounts normally are found in the ledger book o now a days, this is normally in the format of a computer listing Double Entry Bookkeeping recording the dual effects of the business transaction each transaction affects at least two accounts Chart of Accounts lists all the accounts (in numerical order) and their accounts numbers o accounts numbers used as posting reference structure to account numbering (normally account numbers are three or more digits long) Assets 1 00 - 199 Liabilities 2 00 - 299 Owner's Equity 3 00 - 399 Revenues 4 00 - 499 Expenses 5 00 - 9 99 Prepared by Nadine Barrett - Summer 2019 1
Chapter 2 - The Recording Process The T Account abbreviated form of the ledger account used to help illustrate the effect of a transaction debits and credits keep the accounting equation in balance Increases and Decreases in the Accounts the type of account determines how increases and decreases are recorded normal balance of an account is on the side an increase is recorded Debits/Credits for Assets Debits (DR) - increase Credits (CR) - decrease ASSETS DR CR Prepared by Nadine Barrett - Summer 2019 2
Chapter 2 - The Recording Process Debits/Credits for Liabilities and Owners' Equity Debits - decrease Credits - increase LIABILITIES OWNER'S EQUITY DR CR DR CR Owners' Equity Expanded Capital CAPITAL DR CR owner's claims to the assets of the business amounts received from owner's investments recorded directly in the owner's capital account balance equals investments plus net income minus net losses and owner's withdrawals Net Income = Total Revenues exceeding Total Expenses Net Loss = Total Expenses exceeding Total Revenues Prepared by Nadine Barrett - Summer 2019 3
Uploaded by PrivatePorpoise3804 on coursehero.com