Intermediate accounting IFRS edtion kieso weygrant warfield chapter 03
Bạn đang xem bản rút gọn của tài liệu. Xem và tải ngay bản đầy đủ của tài liệu tại đây (3.3 MB, 125 trang )
3-1
PREVIEW OF CHAPTER
Intermediate Accounting
IFRS 2nd Edition
Kieso, Weygandt, and Warfield
3-2
3
3
The Accounting Information System
LEARNING OBJECTIVES
After studying this chapter, you should be able to:
1.
Understand basic accounting terminology.
6.
Prepare financial statements from the adjusted trial balance.
2.
Explain double-entry rules.
7.
Prepare closing entries.
3.
Identify steps in the accounting cycle.
8.
Prepare financial statements for a merchandising company.
4.
Record transactions in journals, post to ledger accounts, and prepare a trial
balance.
5.
3-3
Explain the reasons for preparing adjusting entries.
ACCOUNTING INFORMATION SYSTEM
Accounting Information System (AIS)
3-4
Collects and processes transaction data.
Disseminates financial information to interested parties.
Varies widely from business to business.
►
Nature of business
►
Type of transactions
►
Size of business
►
Volume of data
►
Informational demands
LO 1
ACCOUNTING INFORMATION SYSTEM
Helps management answer such questions as:
3-5
How much and what kind of debt is outstanding?
Were our sales higher this period than last?
What assets do we have?
What were our cash inflows and outflows?
Did we make a profit last period?
Are any of our product lines or divisions operating at a loss?
Can we safely increase our dividends to shareholders?
Is our rate of return on net assets increasing?
LO 1
ACCOUNTING INFORMATION SYSTEM
Basic Terminology
3-6
Event
Journal
Transaction
Posting
Account
Trial Balance
Real Account
Adjusting Entries
Nominal Account
Financial Statements
Ledger
Closing Entries
LO 1
3
The Accounting Information System
LEARNING OBJECTIVES
After studying this chapter, you should be able to:
1.
Understand basic accounting terminology.
6.
Prepare financial statements from the adjusted trial balance.
2.
Explain double-entry rules.
7.
Prepare closing entries.
3.
Identify steps in the accounting cycle.
8.
Prepare financial statements for a merchandising company.
4.
Record transactions in journals, post to ledger accounts, and prepare a trial
balance.
5.
3-7
Explain the reasons for preparing adjusting entries.
ACCOUNTING INFORMATION SYSTEM
Debits and Credits
An account shows the effect of transactions on a given asset, liability, equity, revenue, or expense
account.
3-8
Double-entry accounting system (two-sided effect).
Recording done by debiting at least one account and crediting another.
DEBITS must equal CREDITS.
LO 2
Debits and Credits
Account
An arrangement that shows the effect of transactions on
an account.
An Account can be illustrated in
a T-Account form.
3-9
Debit = “Left”
Credit = “Right”
Account Name
Debit / Dr.
Credit / Cr.
LO 2
Debits and Credits
If the sum of Debit entries are greater than the sum of Credit entries, the account will have a
debit balance.
Account Name
Debit / Dr.
Transaction #1
$10,000
Transaction #3
8,000
Balance
3-10
Credit / Cr.
$3,000
Transaction #2
$15,000
LO 2
Debits and Credits
If the sum of Credit entries are greater than the sum of Debit entries, the account will have a
credit balance.
Account Name
Debit / Dr.
Transaction #1
Balance
3-11
$10,000
Credit / Cr.
$3,000
Transaction #2
8,000
Transaction #3
$1,000
LO 2
Debits and Credits Summary
3-12
Normal
NormalBalance
Balance
Normal
NormalBalance
Balance
Debit
Debit
Credit
Credit
LO 2
Debits and Credits Summary
Statement of Financial Position
Income Statement
Asset
=
Liability
+ Equity
Revenue
- Expense
Debit
Credit
3-13
LO 2
The Accounting Equation
Relationship among the assets, liabilities and equity of a business:
ILLUSTRATION 3-3
Expanded Equation and
Debit/Credit Rules and Effects
The equation must be in balance after every transaction. For every Debit there must be a Credit.
3-14
LO 2
Double-Entry System Illustration
1.
Owners invest $40,000 in exchange for ordinary shares.
Assets
Assets
+ 40,000
3-15
=
Liabilities
Liabilities
+
Equity
Equity
+ 40,000
LO 2
Double-Entry System Illustration
2.
Disburse $600 cash for secretarial wages.
Assets
Assets
- 600
3-16
=
Liabilities
Liabilities
+
Equity
Equity
- 600 (expense)
LO 2
Double-Entry System Illustration
3.
Purchase office equipment priced at $5,200, giving a 10 percent promissory note in
exchange.
Assets
Assets
+ 5,200
3-17
=
Liabilities
Liabilities
+
Equity
Equity
+ 5,200
LO 2
Double-Entry System Illustration
4.
Received $4,000 cash for services performed.
Assets
Assets
+ 4,000
3-18
=
Liabilities
Liabilities
+
Equity
Equity
+ 4,000 (revenue)
LO 2
Double-Entry System Illustration
5.
Pay off a short-term liability of $7,000.
Assets
Assets
- 7,000
3-19
=
Liabilities
Liabilities
+
Equity
Equity
- 7,000
LO 2
Double-Entry System Illustration
6.
Declared a cash dividend of $5,000.
Assets
Assets
=
Liabilities
Liabilities
+ 5,000
3-20
+
Equity
Equity
- 5,000
LO 2
Double-Entry System Illustration
7.
Convert a non-current liability of $80,000 into ordinary shares.
Assets
Assets
=
Liabilities
Liabilities
- 80,000
3-21
+
Equity
Equity
+ 80,000
LO 2
Double-Entry System Illustration
8.
Pay cash of $16,000 for a delivery van.
Assets
Assets
=
Liabilities
Liabilities
+
Equity
Equity
- 16,000
+ 16,000
Note that the accounting equation equality is maintained after recording each transaction.
Note that the accounting equation equality is maintained after recording each transaction.
3-22
LO 2
Financial Statements and Ownership Structure
Ownership structure dictates the types of accounts that are part of the equity section.
Proprietorship
Proprietorship or
or
3-23
Corporation
Corporation
Partnership
Partnership
Capital account
Share capital
Drawing account
Share premium
Dividends
Retained Earnings
LO 2
ILLUSTRATION 3-4
Financial Statements and
Ownership Structure
Investments by shareholders
Net income retained in the business
Financial Statements
and Ownership Structure
3-24
LO 2
Financial Statements and Ownership Structure
ILLUSTRATION 3-5
Effects of Transactions
on Equity Accounts
3-25
LO 2
