3 Pages

Accounting & Financial Management
Course Code
AFM 291
Kareen Brown

This preview shows page 1. Sign up to view the full 3 pages of the document.
CHAPTER 3 THE ACCOUNTING INFORMATION SYSTEM 1. Understand basic accounting terminology • Pg.79 2. Explain double-entry rules • Debit and Credit 3. Identify the steps in the accounting cycle • Identification and measurement of transactions and other events → Journalization → Posting (general ledger-monthly; subsidiary ledger-daily) → Trial Balance preparation → Adjustments on accruals, prepayments, and estimated items → Adjusted trial balance or optional work sheet → Statement of preparation (4 major statements) → Closing (temporary accounts) → Post-closing trial balance (optional) → Reversing entries (optional) 4. Record the transactions in journals, post journal entries to ledger accounts, and prepare a trial balance • General Journal o Have accounts and amounts to be debited and credited, a date, and an explanation • Special Journals o Summarize transactions that have a common characteristics (e.g., cash receipts, sales, purchases, cash payments), saving time doing the various bookkeeping tasks 5. Explain the reasons for preparing adjusting entries (pg.89) • Adjustments achieve a proper matching of revenues and expenses, which is necessary in order to determine the correct net income for the current period • To achieve an accurate statement of the end-of-the-period balances in assets, liabilities, and owners’ equity accounts • Adjustments are needed to ensure that the revenue recognition principle is followed and proper matching occurs • Prepayments: 1. Prepaid Expenses (expenses paid in cash and recorded as assets before they’re used or consumed) 2. Unearned Revenue (revenues received in cash and recorded as liabilities before they are earned) • Accruals 1. Ac
More Less
Unlock Document

Only page 1 are available for preview. Some parts have been intentionally blurred.

Unlock Document
You're Reading a Preview

Unlock to view full version

Unlock Document

Log In


Join OneClass

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

Sign up

Join to view


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.