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Lecture 3

ACG 2021 Lecture 3: Chapter 3 Financial Accounting Summary

3 Pages
21 Views
Fall 2017

Department
Accounting
Course Code
ACG-2021
Professor
Jeff S Paterson
Lecture
3

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Chapter 3
(The Accounting Information System)
-system of Collecting and processing transaction data and communicating
financial information to decision makers.
Assets liabilities, or stockholders equity items change as a result of some
economic event. Assets= Liabilities+ Stock
Holders equity
Dual Effect: Accounting equation will always balance every transaction effects 2
accounts.
Debit: “Left”
Credit: “Right”
An account can be illustrated in a T- Account Form; which includes Account
name debit and credit.
Double entry System: Each transaction must have 2 or more accounts to keep
basic equation in balance.
(Debits must equal credits)
If debits are greater then credits, the account will have a debit balance.
If credits are greater then debits then the account will have a credit balance.
Assets: increase Debits
Liabilities: increase Credits
Stock holders Equity: increase credits
Dividends: decrease with credits
Cedit: revenue
Debit: expenses
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Description
Chapter 3 (The Accounting Information System) -system of Collecting and processing transaction data and communicating financial information to decision makers. • Assets liabilities, or stockholders equity items change as a result of some economic event. Assets= Liabilities+ Stock Holders equity Dual Effect: Accounting equation will always balance every transaction effects 2 accounts. Debit: “Left” Credit: “Right” • An account can be illustrated in a T- Account Form; which includes Account name debit and credit. Double entry System: Each transaction must have 2 or more accounts to keep basic equation in balance. (Debits must equal credits) • If debits are greater then credits, the account will have a debit balance. • If credits are greater then debits then the account will have a credit balance. Assets: increase Debits Liabilities: increase Credits Stock holders Equity: increase credits Dividends: decrease with credits Cedit: revenue Debit: expenses What accounts normally have a debit balance: Assets, Dividends, Expenses The recording process 1. Analyze each transaction 2. Enter transaction into the journal 3. transfer Journal information to Ledger accounts The Ledger: Comprised of the entire group of accoun
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