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The Recording Process: Learning Objectives
The Recording Process: Learning Objectives
Learning Objectives
Describe how accounts, debits, and credits are used to record
1 business transactions.
2-1
LEARNING Describe how accounts, debits, and credits are
1
OBJECTIVE used to record business transactions.
2-2 LO 1
The Account
2-3 LO 1
Debits and Credits
Account Name
Debit / Dr. Credit / Cr.
Balance $15,000
2-4 LO 1
Debits and Credits
Account Name
Debit / Dr. Credit / Cr.
Balance $1,000
2-5 LO 1
Debits and Credits
3-23
increase side.
Liabilities
Debit / Dr. Credit / Cr.
Normal Balance
Chapter
3-24
2-6 LO 1
Debits and Credits
2-7 LO 1
Debits and Credits
Normal Balance
Chapter
3-27
2-8 LO 1
Debits/Credits Rules
Liabilities
Normal
Debit / Dr. Credit / Cr.
Normal
Balance Balance
Debit Credit Normal Balance
Assets Chapter
3-24
Owner’s Equity
Debit / Dr. Credit / Cr.
Debit / Dr. Credit / Cr.
Normal Balance
Normal Balance
Chapter
3-23
Expense Chapter
3-25
Revenue
Debit / Dr. Credit / Cr.
Debit / Dr. Credit / Cr.
Normal Balance
Normal Balance
Chapter
3-27 Chapter
3-26
2-9 LO 1
Debits/Credits Rules
Debit
Credit
2-10 LO 1
Debits/Credits Rules
Question
Debits:
2-11 LO 1
Debits/Credits Rules
Question
Accounts that normally have debit balances are:
2-12 LO 1
Summary of Debit/Credit Rules
Expanded
Equation
Debit/Credit
Effects
2-13 LO 1
DO IT! 1 Normal Account Balances
Kate Browne has just rented space in a shopping mall. In this space,
she will open a hair salon to be called “Hair It Is.” A friend has advised
Kate to set up a double-entry set of accounting records in which to
record all of her business transactions. Identify the balance sheet
accounts that Kate will likely need to record the transactions needed
to open her business. Indicate whether the normal balance of each
account is a debit or a credit.
2-14 LO 1
LEARNING Indicate how a journal is used in the
2
OBJECTIVE recording process.
The Journal
Book of original entry.
2-16 LO 2
Steps in the Recording Process
GENERAL JOURNAL
Equipment 7,000
Cash 7,000
2-17 LO 2
Steps in the Recording Process
GENERAL JOURNAL
2-18 LO 2
2-19 LO 2
DO IT! 2 Recording Business Activities
2-20 LO 2
DO IT! 2 Recording Business Activities
The Ledger
General Ledger contains all the asset, liability, and owner’s
equity accounts.
Illustration 2-15
2-22 LO 3
2-23 LO 3
The Ledger
2-24 LO 3
Ledger
POSTING
Transferring
journal entries
to the ledger
accounts.
Illustration 2-17
Posting a journal
entry
2-25 LO 3
Posting
Question
Posting:
2-26 LO 3
Chart of Accounts
Illustration 2-18
2-27 LO 3
The Recording Process Illustrated
Illustration 2-19
2-28 LO 3
Illustration 2-20
2-29 Purchase of office equipment LO 3
Illustration 2-21
Receipt of cash
for future service
2-30 LO 3
Illustration 2-22
2-31 Payment of monthly rent LO 3
Illustration 2-23
Payment for
insurance
2-32 LO 3
Illustration 2-24
2-33 Purchase of supplies on credit LO 3
The Recording Process Illustrated
Illustration 2-25
Hiring of employees
2-34 LO 3
Illustration 2-26
2-35 Withdrawal of cash by owner LO 3
Illustration 2-27
2-36 Payment of salaries LO 3
Illustration 2-28
2-37 Receipt of cash for services performed LO 3
Summary Journalizing and Posting
Illustration 2-29
2-38 LO 3
2-39 Illustration 2-29 LO 3
Illustration 2-30
2-40
LO 3
DO IT! 3 Posting
2-41 LO 3
LEARNING
OBJECTIVE
4 Prepare a trial balance.
2-43 LO 4
Dollar Signs and Underlining
Dollar Signs
Do not appear in journals or ledgers.
Typically used only in the trial balance and the financial
statements.
Shown only for the first item in the column and for the total
of that column.
Underlining
A single line is placed under the column of figures to be
added or subtracted.
Totals are double-underlined.
2-44 LO 4
Trial Balance
Question
A trial balance will not balance if:
2-45 LO 4
2-46 LO 4
DO IT! 4 Trial Balance
2-47 LO 4
DO IT! 4 Trial Balance
2-48
LO 4
A Look at IFRS
Key Points
Similarities
Transaction analysis is the same under IFRS and GAAP.
Both the IASB and the FASB go beyond the basic definitions
provided in the textbook for the key elements of financial
statements, that is assets, liabilities, equity, revenue, and
expenses. The implications of the expanded definitions are
discussed in more advanced accounting courses.
2-49 LO 5
A Look at IFRS
Key Points
Similarities
As shown in the textbook, dollar signs are typically used only in
the trial balance and the financial statements. The same practice
is followed under IFRS, using the currency of the country where
the reporting company is headquartered.
A trial balance under IFRS follows the same format as shown in
the textbook.
2-50 LO 5
A Look at IFRS
Key Points
Differences
IFRS relies less on historical cost and more on fair value than do
FASB standards.
Internal controls are a system of checks and balances designed
to prevent and detect fraud and errors. While most public U.S.
companies have these systems in place, many non-U.S.
companies have never completely documented the controls nor
had an independent auditors attest to their effectiveness.
2-51 LO 5
A Look at IFRS
2-52 LO 5
A Look at IFRS
a) IFRS reverses the rules of debits and credits, that is, debits
are on the right and credits are on the left.
2-53 LO 5
A Look at IFRS
2-54 LO 5
A Look at IFRS
2-55 LO 5
Copyright
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