Horngren Acct7 Ch02 Stu
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Transcript of Horngren Acct7 Ch02 Stu
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Copyright 2007 Prentice-Hall. All rights reserved
1
Recording BusinessRecording Business
ransactionsransactions
Chapter 2
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2
!"#ective 1!"#ective 1
$se accounting ter%s
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AccountAccount
& Basic su%%ary device
& 'etailed record o( increases and
decreases in speci(ic assets) lia"ilities) oro*ner+s e,uity during a period
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edgeredger
& Boo or printout holding all the accounts
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ia"ilities
ia"ilities /,uity
/,uityAssets
Assets
Accounting /,uationAccounting /,uation
Accounts are grouped in "road categories3
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AssetsAssets
/cono%ic resources that *ill "ene(it the "usinessin the (uture
& Cash
& Accounts Receiva"le& 4otes Receiva"le
& Prepaid /5penses
&and& Building
& /,uip%ent) 6urniture) 6i5tures
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ia"ilitiesia"ilities
Creditors+ clai%s to assets de"t8
& Accounts Paya"le
& 4otes Paya"le& Accrued ia"ilities
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!*ner+s /,uity!*ner+s /,uity
!*ner+s clai% to the assets
& Capital
& 9ithdra*als& Revenues
& /5penses
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Revenues
NotesPayable
AccountsReceivable
C. Lapp,Capital
AccountsPayable
Ledger
Cash
All :ndividual Accounts Co%"inedAll :ndividual Accounts Co%"ined
;ae $p the edger;ae $p the edger
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Chart o( AccountsChart o( Accounts
& ist o( all accounts used "y a co%pany
along *ith the account nu%"ers
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12
!"#ective 2!"#ective 2
Apply the rules o( de"it and credit
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'ou"le /ntry
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Account Name
(Left Side)
Debit
(Right Side)
Credit
ing and deter%ining the"alance in a given account
-Account-Account
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Debit CreditDebit Credit
AssetsAssets
++ --
Rules o( 'e"it and CreditRules o( 'e"it and Credit
LiabilitiesLiabilities EquityEquity== ++Debit CreditDebit Credit
- +- +
Debit CreditDebit Credit
- +- +
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Rules o( 'e"it and CreditRules o( 'e"it and Credit
Owners EquityOwners EquityDebit CreditDebit Credit - +- +
ReenuesReenues
- +- +Debit CreditDebit Credit
OwnersOwners
Ca!italCa!italDebit CreditDebit Credit
- +- +
OwnersOwners
"ithdrawals"ithdrawals
Debit CreditDebit Credit
++ --
E#!ensesE#!ensesDebit CreditDebit Credit
++ --
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ReenuesReenues E#!ensesE#!enses
OwnersOwners
Ca!italCa!ital
OwnersOwners
"ithdrawals"ithdrawals$$
++$$
/5panding the/5panding the
Rules o( 'e"it and CreditRules o( 'e"it and Credit
Owners Equity
Debit CreditDebit Credit
- +- +Debit CreditDebit Credit
- +- +Debit CreditDebit Credit
++ --Debit CreditDebit Credit
++ --
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Re%e%"er3 ?ust as A:C/@Re%e%"er3 ?ust as A:C/@
'e"it Credit
A Assets -
- ia"ilities - : :nco%e
- C Capital
/ /5penses -
Really) this is revenues) "ut r #ust doesn+t (it in@
he (irst and the
last are increased
*ith a de"it
he %iddle three
are increased *ith
credits
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LiabilitiesLiabilities EquityEquityAssetsAssets %% ++
4or%al Balances4or%al Balances
Debit CreditDebit Credit
+ -+ -Debit CreditDebit Credit
- +- +Debit CreditDebit Credit
- +- +
&'ral&'ral
alan*ealan*e&'ral&'ral
alan*ealan*e&'ral&'ral
alan*ealan*e
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++
Owners Equity
4or%al Balances4or%al Balances
Debit CreditDebit Credit
+ -+ -DebitDebit
CreditCredit- +- +Debit CreditDebit Credit
- +- +
&'ral&'ral
alan*ealan*e&'ral&'ral
alan*ealan*e&'ral&'ral
alan*ealan*e
ReenuesReenues E#!ensesE#!ensesOwnersOwners
Ca!italCa!italOwnersOwners
"ithdrawals"ithdrawals$$ $$
Debit CreditDebit Credit
+ -+ -
&'ral&'ral
alan*ealan*e
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21
!"#ective !"#ective
Record transactions in the #ournal
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?ournal?ournal
& Chronological record o( the transactions
& Consists o( at least one de"it and one
credit
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?ournali>ing ransactions?ournali>ing ransactions
& :denti(y each account a((ected and its type
& 'eter%ine *hether each account is
increased or decreased. $se the rules o(
de"it and credit
& Record transaction in #ournal) including a
"rie( e5planation
= 'e"it side o( entry is entered (irst
= otal de"its should al*ays e,ual total credits
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Deneral ?ournalDeneral ?ournal
?ournal Page 1
'ate 'escription 'e"it Credit?ul 1 Cash EF)000
ange) Capital EF)000
:nvest%ent (ro% o*ner
Accounts A((ectedAccounts A((ected
'ollar a%ount o(
de"its and credits
'ollar a%ount o(
de"its and credits
/5planation o(
transaction
/5planation o(
transaction
ransaction'ate
ransaction
'ate
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Deneral ?ournalDeneral ?ournal
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Deneral ?ournalDeneral ?ournal
& 'e"its are A9AG< entered (irst in an
entry. $se the /AC account title and
do not a""reviate
& Credits are :4'/4/' and listed second
& 'o not use dollar signs
&
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/5ercise 2-F/5ercise 2-F
Analysis o( ?une 1 transaction3
& Cash is increasing
& Cash is an asset account& :ncrease an asset *ith a de"it
D/4/RA ?!$R4A
DAE DESCR,,O& RE. DE, CRED,
?un 1 Cash 2F)000
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/5ercise 2-F/5ercise 2-F
Analysis o( ?une 1 transaction3
& ;. Bro*n) Capital is increasing
& Capital is an o*ner+s e,uity account& :ncrease o*ner+s e,uity *ith a credit
D/4/RA ?!$R4A
DAE DESCR,,O& RE. DE, CRED,
?un 1 Cash 2F)000
;. Bro*n) Capital 2F)000
Owner invested in business
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/5ercise 2-F/5ercise 2-F
Analysis o( ?une 2 transaction3
& ;edical
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/5ercise 2-F/5ercise 2-F
Analysis o( ?une 2 transaction3
& Accounts Paya"le is increasing
& Accounts Paya"le is a lia"ility account& :ncrease a lia"ility *ith a credit
D/4/RA ?!$R4A
DAE DESCR,,O& RE. DE, CRED,
?un 2 ;edical
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/5ercise 2-F/5ercise 2-F
Analysis o( ?une 2 transaction3
& Rent /5pense is increasing
& Rent /5pense is an e5pense account& :ncrease an e5pense *ith a de"it
D/4/RA ?!$R4A
DAE DESCR,,O& RE. DE, CRED,
?un 2 Rent /5pense E)000
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/5ercise 2-F/5ercise 2-F
Analysis o( ?une 2 transaction3
& Cash is decreasing
& Cash is an asset account& 'ecrease an asset *ith a credit
D/4/RA ?!$R4A
DAE DESCR,,O& RE. DE, CRED,
?un 2 Rent /5pense E)000
Cash E)000
Paid rent for the month
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/5ercise 2-F/5ercise 2-F
Analysis o( ?une transaction3
& Accounts Receiva"le is increasing
& Accounts Receiva"le is an asset account& :ncrease an asset *ith a de"it
D/4/RA ?!$R4A
DAE DESCR,,O& RE. DE, CRED,
?un Accounts Receiva"le 12)000
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/5ercise 2-F/5ercise 2-F
Analysis o( ?une transaction3
&
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F
!"#ective E!"#ective E
Post (ro% the #ournal to the ledger
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PostingPosting
& Periodically) #ournal entries are posted to
ledger accounts to deter%ine "alances in
each account
& Posting = copying a%ounts (ro% the
#ournal to the ledger
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/5ercise 2-J/5ercise 2-J
Cash Accounts Paya"le
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Cash
2F)000
Accounts Paya"le
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Cash
2F)000
Accounts Paya"le
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Cash
2F)000
Accounts Paya"le
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Cash
2F)000
Accounts Paya"le
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6lo* o( Accounting 'ata6lo* o( Accounting 'ata
ransa*ti'n O**urs
S'ur*e D'*uents re!ared
ransa*ti'n Analy5ed
ransa*ti'n 6'urnali5ed 7 'sted
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E
!"#ective F!"#ective F
Prepare and use a trial "alance
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rial Balancerial Balance
& ist o( all accounts *ith their "alances
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;ie Bro*n) ;.'.
rial Balance
?une 0) 200K
Cash 21)000
Accounts Receiva"le 12)000
;edical
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ocating rial Balance /rrorsocating rial Balance /rrors
9hat i( it doesn+t "alanceL
& :s the addition correctL
& Are all accounts listedL& Are the "alances listed correctlyL
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ocating rial Balance /rrorsocating rial Balance /rrors
& 'ivide the di((erence "y t*o
= :s there a de"itMcredit "alance (or this a%ount
posted in the *rong colu%nL
& 'ivide the di((erence "y J. :( evenly
divisi"le) the error %ay "e a slide or
transposition error
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D/4/RA ?!$R4A
DAE DESCR,,O& RE. DE, CRED,
/5ercise 2-1K/5ercise 2-1K
Aug 1 Cash N0)000
R. 9ood*ard) Capital N0)000To record investment by owner
2
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D/4/RA ?!$R4A
DAE DESCR,,O& RE. DE, CRED,
/5ercise 2-F/5ercise 2-F
Aug E Building F0)000
Cash F0)000Purchased building
N Cash )000
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D/4/RA ?!$R4A
DAE DESCR,,O& RE. DE, CRED,
/5ercise 2-1K/5ercise 2-1K
Aug J Accounts Paya"le 100
Cash 100Paid on account
17 Accounts Receiva"le 2)100
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D/4/RA ?!$R4A
DAE DESCR,,O& RE. DE, CRED,
/5ercise 2-1K/5ercise 2-1K
Aug 2 Cash 1)200
Accounts Receiva"le 1)200Received payment on account
'th 'f these a**'unts
are assets8 Cash is
in*reasing 9 debit8
A**'unts Re*eiable is
de*reasing - *redit
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D/4/RA ?!$R4A
DAE DESCR,,O& RE. DE, CRED,
/5ercise 2-1K/5ercise 2-1K
Aug 1
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/5ercise 2-1J/5ercise 2-1JAug 9 100
Cash
Aug 1 60,000 Aug 4 50,000Aug 6 3,000
A**'unts Re*eiable
Aug 17 2,100Seri*e Reenue
Aug 6 3,000
al8 0/1322
uilding
Aug 4 50, 000
R8 "''dward1 Ca!ital
Aug 1 60,000
Rent E#!ense
Salary E#!ense
Aug 2 200
Su!!lies
Aug 2 200
A**'unts ayable
Aug 9 100
al8 022
Aug 17 2,100
Aug 23 1,200
Aug 23 1,200
Aug 31 1,200Aug 31 500
al8 :22al8 41022
Aug 31 1,200
Aug 31 500
a;e the differen*e
between t'tal debits
and t'tal *redits t'
deterine the balan*e
in ea*h a**'unt8 ,f
debits are greater than
*redits1 the a**'unt
has a debit balan*eand i*e ersa
/ i 2 1J/ i 2 1J
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9ood*ard echnology
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/nd o( Chapter 2/nd o( Chapter 2