ADM 1340 Chapter Notes - Chapter 3: Accounting Information System, Trial Balance, General Ledger

• School: University of Ottawa
• Department: Administration
• Course: ADM 1340
• Professor: Heri Rakotovololona

Document Summary

Accounting information system- the system of collecting and processing transaction data and communicating financial information to decision-makers. Accounting transaction- o(cid:272)(cid:272)u(cid:396)s (cid:449)he(cid:374) assets, lia(cid:271)ilities, o(cid:396) sha(cid:396)eholde(cid:396)s" e(cid:395)uit(cid:455) ite(cid:373)s (cid:272)ha(cid:374)ge as a (cid:396)esult of some economic event. 4- receipt of cash in advance from customer (p108) ***see illustration 3-2 on page 112 of the textbook for a summary of the transactions*** 1- each transaction must be analyzed for its effect on the three primary components of the a(cid:272)(cid:272)ou(cid:374)ti(cid:374)g e(cid:395)uatio(cid:374) (cid:894)assets, lia(cid:271)ilities, a(cid:374)d sha(cid:396)eholde(cid:396)s" e(cid:395)uit(cid:455)(cid:895). 2- the two sides of the equation must always be equal. Account- is an individual accounting record of increases and decreases in a specific asset, liability, or sha(cid:396)eholde(cid:396)s" e(cid:395)uit(cid:455) ite(cid:373). T account- a record of an account in its simplest form (see illustration 3-3 on page 113 for an example). Each account has a natural balance of either credit or debit. 2- liabilities a(cid:374)d sha(cid:396)eholde(cid:396)s" e(cid:395)uit(cid:455) are usually a credit account.