MOS1023- Lecture 3.docx

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Management and Organizational Studies
Management and Organizational Studies 1023A/B
Randall Balcome

Lecture #3 January 29, 2014 Accounting Information System Accounting Information System: • The system of collecting and processing transaction data and communicating financial information • Can vary widely based on factors such as: o Type of business and its transactions o Size of company o Amount of data o Information requirements Accounting Transactions: • Transactions are economic events that must be recorded in the financial statements • Not all events are recorded and reported as accounting transactions: o Only those that change assets, liabilities or shareholders’equity Analyzing Transactions: • Transaction analysis determines impact on the accounting equation Debits and Credits: • Describe where entries are made in the accounts: o Debit (DR) o Credit (CR) • If debit exceed credit amounts, account has a debit balance • If credit exceed debit amounts, account has a credit balance • Tools used for recording transactions • Debit refers to the LEFT and Credit to the RIGHT side of the T-Account. • Debit and Credit are neutral terms and. Neither is “good” or “bad”! Account: • An individual accounting record of increases and decreases in a specific asset, liability, or shareholders’equity item • Three parts: o The title of the account o Aleft or debit side o Aright or credit side • Total the entries to each side. If the greater sum is on the left, the account has a debit balance  and if greater on the right, it's a credit balance Accounting Cycle: • Step 1:Analyze each transaction to determine its effect on accounts (if any) o Evidence comes from a source document • Step 2: Record transaction as a journal entry in the general journal o Accounting record where the transactions are recorded in chronological
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