Kế toán, kiểm toán - Chapter three: Asset, liability, and owner’s equity accounts

CHAPTER THREEASSET, LIABILITY, AND OWNER’S EQUITY ACCOUNTS1. Set up T accounts.2. Enter opening balances in T accounts.3. Record debits and credits in asset, liability, and owner’s equity accounts.4. Foot and balance the accounts.5. Prove the fundamental accounting equation.ASSET, LIABILITY, AND OWNER’S EQUITY ACCOUNTSObjectives:3The Form of AccountsThe simplest form of an account looks like the letter “T” and is therefore called a T account.The left side is the debit side.The right side is the credit side.4Opening Accounts for the Balance Sheet ItemsFor assets, the beginning balance is on the left side, or debit side.For liabilities and owner’s equity, the beginning balances are on the right hand side, or credit side. 5Recording Changes in AccountsFor asset accounts, increases are entered on the debit side. Decreases are entered on the credit side.For liabilities and owner’s equity accounts, increases are entered on the credit side. Decreases are entered on the debit side.6Finding the Balances of AccountsEach side of the account is added.The smaller balance is subtracted from the larger balance. The difference is the account balance. The account balance is recorded on the balance side in pencil. This is known as a pencil footing.7Using Account Balances to Prove the Accounting EquationOnce the account balances have been computed they can be used to prove the accounting equation.assets = liabilities + owner’s equity.8Accounting TerminologyAccountAccount BalanceDebitCreditGeneral LedgerPencil FootingSource Document9Chapter SummaryA separate account is kept for every asset, liability, and owner’s equity item in a business.The accounts are used to record the increases and decreases caused by daily transactions. All accounts together are known as the general ledger. 10Chapter Summary(continued)Two things must be considered when analyzing and recording each part of a business transaction:1. The type of account affected (asset, liability, or owner’s equity).2. Whether an increase or a decrease is involved.11Chapter Summary(continued)The left side of an account is the debit side.The right side of an account is the credit side.12Chapter Summary(continued)Increases in assets are recorded as debits.Decrease in assets are recorded as credits.13Chapter Summary(continued)Increases in liabilities and in owner’s equity are recorded as credits.Decreases in liabilities and in owner’s equity are recorded as debits.14Chapter Summary (continued)An account balance is the difference between the total debits and the total credits in an account.A total or balance written in small pencil figures is called a pencil footing.15Chapter Summary (continued)To foot or pencil-foot a column of figures means to total the figures.161. The “T” in T account stands for transaction.2. Beginning balances for assets are on the debit side of the account. 3. Liabilities and owner’s equity accounts both have debit balances.Topic QuizAnswer the following true/false questions:TRUEFALSEFALSE17 Investigating on the InternetSources of information about accounts and account balances can be accessed on many corporate websites.Search for a website of a business that shows a financial report and study how the report addresses their accounts.18(Return to Topic Quiz)1. The “T” in T account stands for transaction.FALSEIt is because an account looks like the letter “T.”19(Return to Topic Quiz)3. Liabilities and owner’s equity accounts both have debit balances.FALSELiabilities and owner’s equity accounts have credit balances.20