Textbook Notes (367,844)
Canada (161,454)
Accounting (533)
ACC 414 (22)
Else Grech (19)
Chapter 3

Chapter 3.docx

3 Pages
128 Views
Unlock Document

Department
Accounting
Course
ACC 414
Professor
Else Grech
Semester
Fall

Description
Chapter 3  Debit and credits o Making an entry on the left side of the T account is called debiting o Making an entry on the right side of the T account is called crediting o If the total of the debit amount is more than credits, the account will have a debit balance (vice versa) o Basis for the double-entry system of recording transactions  Gives a logical method for recording transactions. o All assets and expense (as well as dividends) accounts are increased on the left side, and decreased on the right side of the T account. o All liability, shareholders equity (besides dividends) and revenue are increased on the right side and decreased on the left side  Financial Statements and ownership structure o In a corporation, the following accounts will be used in the equity section:  Common shares, contributed surplus, dividends, retained earnings, accumulated other comprehensive income… o In a proprietorship or partnership  Capital account: used to indicate the investment in the company by the owner(s)  Drawings account: used to indicate withdrawals by the owner(s)  ^-- these two are grouped under Owners equity THE ACCOUNTING CYCLE  Accounting cycle o (1) Identification and measurement of transactions and other events  Any change in a cash sale or purchase (no matter the size) must be recorded  An item should be recognized if it meets the definition of an element and is measurable  Events are of two types  External events: interaction between an entity and its environment  Internal events: interaction within an entity o (2) Journalization  To have a complete record of each transaction or other selected event in one place, a journal is used  Chronological is the simplest used with four parts  The accounts and amounts to be debited  The accounts and amounts to be credited  A date  An explanation  *special journals*: summarize transactions that have a common characteristic which saves time in doing the various bookkeeping tasks 1 o (3) Posting  Posting consist of the items entered in the general journal that are transferred to the general ledger  The general journal posting is completed when all the posting reference numbers have been recorded opposite the account titles in the journal  Indicates the ledger account number of the account involved.  Indicates that the posting has been completed for that item o (4) Trial balance preparation  Prepared at the end of a
More Less

Related notes for ACC 414

Log In


OR

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


OR

By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.


Submit