Management and Organizational Studies 1023A/B Chapter Notes - Chapter 3: Uptodate, Retained Earnings, Accrual

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 1023A/B
• Professor: Barry Hawn

Document Summary

Accounting information system: the system of collecting and processing transaction data and communicating financial info. Can vary widely (simple to complicated) based on factors such as: type of business and its transactions, size of company, amount of data. Transactions are economic events that must be recorded in the financial statement. Only events that cause changes in assets, liabilities, or shareholders" equity should be recorded. Transaction analysis determines impact on the accounting equation: The accounting equation must always balance, so each transaction has a dual (double-sided) effect on the equation. Account: an individual accounting record of increases and decreases in a specific asset, liability, or shareholders" equity item. Consists of 3 parts (t-account: title of account. Left = debit side: right = credit side. Accountants use debit (dr) and credit (cr) to describe where entries are made in the accounts. Entering an amount on the left side of an account is called debiting the account.