Kế toán, kiểm toán - Chapter 2: Analyzing and recording transactions

Chapter 2Analyzing and recording transactions Copyright © 2015 by McGraw-Hill Education (Asia). All rights reservedAnalyze each transaction and event from source documentsAnalyzing and Recording ProcessRecord relevant transactions and events in a journalPost journal information to ledger accountsPrepare and analyze the trial balanceC 1Sales TicketsBank StatementsPurchase OrdersChecksSource DocumentsBills from SuppliersEmployee EarningsRecordsC 1An account is a record of increases and decreases in a specific asset, liability, equity, revenue, or expense item.The Account and its AnalysisThe general ledger is a record containing all accounts used by the company. C 2The Account and its AnalysisOwner, CapitalOwner, WithdrawalsC 2LandEquipmentBuildingsCashNotes ReceivableSuppliesPrepaid AccountsAccounts ReceivableAssetAccountsAsset AccountsC 2Accrued LiabilitiesUnearned RevenueNotes PayableAccounts PayableLiabilityAccountsLiability AccountsC 2EquityAccountsRevenuesOwner’s CapitalOwner’s WithdrawalsExpensesEquity AccountsC 2LiabilitiesEquityAssets=+The Account and its AnalysisOwner’s Capital Owner's Withdrawals RevenuesExpenses++––C 2Ledger and Chart of AccountsThe ledger is a collection of all accounts for aninformation system. A company’s size and diversityof operations affect the number of accounts needed.The chart of accounts is a list of all accounts and includes anidentifying number for each account.C 3Debits and CreditsA T-account represents a ledger account and is a tool used to understand the effects of one or more transactions. C 4LiabilitiesEquityAssets=+Double-Entry AccountingDebit CreditDebit CreditDebit CreditASSETS + -LIABILITIES - +EQUITIES - +C 4NormalNormalNormalRevenuesExpensesOwner’sCapitalOwner’s Withdrawals_+_Debit CreditOwner’s Capital - +Debit CreditOwner’s Withdrawals + -Debit CreditExpenses + -Debit Credit Revenues - +Double-Entry AccountingEquityC 4Double-Entry AccountingAn account balance is the difference between the increases and decreases in an account. Notice the T-Account.C 4JOURNALIZING & POSTING TRANSACTIONSStep 1: Analyze transactions and source documents.LiabilitiesEquityAssets=+Step 2: Apply double-entry accountingStep 4: Post entry to ledgerStep 3: Record journal entryP 1 Dollar amount of debits and creditsJournalizing TransactionsTransaction DateTransaction explanationTitles of Affected AccountsP 1Balance Column AccountT-accounts are useful illustrations, but balance column ledger accounts are used in practice.P 11Identify the debit account in ledger.Posting Journal EntriesP 12Enter the date.Posting Journal EntriesP 13Enter the amount and description.Posting Journal EntriesP 14Enter the journal reference.Posting Journal EntriesP 15Compute the balance.Posting Journal EntriesP 1Enter the ledger reference.6Posting Journal EntriesP 1Analyzing TransactionsAnalysis:101301Posting:A 1Analyzing TransactionsAnalysis:Double entry:126101Posting:A 1Analyzing TransactionsAnalysis:Double entry:167101Posting:A 1Analyzing TransactionsAnalysis:Double entry:126201Posting:A 1Analyzing TransactionsAnalysis:Double entry:403101Posting:A 1After processing its remaining transactions for December, FastForward’s Trial Balance is prepared.DebitsCreditsCash4,350$ Accounts receivable- Supplies9,720 Prepaid Insurance2,400 Equipment26,000 Accounts payable6,200$ Unearned consulting revenue3,000 C. Taylor, Capital30,000 Owner's Withdrawals200 Consulting revenue5,800 Rental revenue300 Salaries expense1,400 Rent expense1,000 Utilities expense230 Total45,300$ 45,300$ FastForwardTrial BalanceDecember 31, 2015The trial balance lists all account balances in the general ledger. If the books are in balance, the total debits will equal the total credits.P 2Preparing a Trial BalancePreparing a trail balance involves three steps:List each account title and its amount (from ledger) in the trial balance. If an account has a zero balance, list it with a zero in the normal balance column (or omit it entirely).Compute the total of debit balances and the total of credit balances.Verify (prove) total debit balances equal total credit balances.P 2Searching for and Correcting ErrorsIf the trial balance does not balance, the error(s) must be found and corrected.Make sure the trial balance columns are correctly added.Make sure account balances are correctly entered from the ledger.See if debit or credit accounts are mistakenly placed on the trial balance.Re-compute each account balance in the ledger.Verify that each journal entry is posted correctly.Verify that each original journal entry has equal debits and credits.P 2Using a Trial Balance to Prepare Financial StatementsP 3Income StatementP 3C. Taylor, Capital 12/1/15-$ Investment by Owner30,000 Net profit3,470 33,470 Owner Withdrawals(200) C. Taylor, Capital, 12/31/1533,270$ Statement of Changes in Equity For the Month Ended December 31, 2015 FASTFORWARDSTATEMENT OF CHANGES IN EQUITY FASTFORWARDConnectionsP 3Statement of Financial PositionConnectionsP 3C. Taylor, Capital 12/1/15-$ Net profit for December3,470 Plus: Investments by Owner30,000 33,470 Less: Owner Withdrawals(200) C. Taylor, Capital, 12/31/1533,270$ Statement of Changes in Equity For the Month Ended December 31, 2015FASTFORWARDPresentation IssuesDollar signs are not used in journals and ledgers.Dollar signs appear in financial statements and other reports such as trial balances. The usual practice is to put dollar signs beside only the first and last numbers in a column.When amounts are entered in the journal, ledger, or trial balance, commas are optional to indicate thousands, millions, and so forth.Commas are always used in financial statements.Companies commonly round amounts in reports to the nearest dollar, or even to a higher level.P 3Debt RatioEvaluates the level of debt risk.A higher ratio indicates that there is a greater probability that a company will not be able to pay its debt in the future.A 2Total LiabilitiesTotal AssetsDebt Ratio = END OF CHAPTER 2