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Chapter 3

ACCT2220 Chapter 3: Accounting Chapter 3

Course Code
ACCT 2220
Ron Baker

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Saturday, October 3, 2015
Chapter 3: The Accounting Information System
Accounting 2220
Accounting Transactions:
Accounting Information System: The system of collecting and processing transaction data
and communicating financial information to interested parties
Accounting Transaction: An economic event that is recorded in the financial statements
because it involves an exchange that affects assets, liabilities, or shareholders’ equity
The Account:
Account: an individual accounting record of increases and decreases in a specific asset, liability
or shareholders’ equity item
T-Account: (also know as a general ledger account) The basic form of an account, with a debit
(left) side and a credit (right) side showing the effect of transactions on the account
Debits and Credits:
Debit: The left side of an account
Credit: The right side of an account
Double-entry Accounting System: A system that records the dual effect of each transaction in
appropriate accounts
The Journal:
Accounting Cycle: A series of nine steps followed by accountant to record transactions and
prepare financial statements. The first four steps were introduced in this chapter: analyzing
transaction (step 1), journalizing transactions (step 2), posting transactions (step 3), and
preparing a trial balance (step 4).
Step 2: General Journal
General Journal: The book of original entry in which transactions are recorded in chronological
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