ACCT 201

ACCO 111
ACCT 201

ACCT 201

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INTRO ACCO 111

TIPOS DE NEGOCIOS OPORTUNIDADES - CONTABILIDAD ENTIDADES IMPORTANTES
GASB,FASB,SEC,OIG,OCPR,AICPA Y OTRAS

The Accounting System: A Conceptual Overview

Operating Environment
Entity B
Business Entity A
System Inputs: Measurable Transactions and Events
Process and Summarize

Entity C

System Outputs: Financial Statements and Reports

Entity D

Entity E

A business continues operation instead of being closed or sold.

A business is accounted for separately from its owner(s).

Financial Statement information is supported by independent, unbiased evidence.

Express transactions and events in monetary units.

Financial statements are based on actual costs incurred in business transactions.

The Accounting Process

Exh. 2.2

Transaction or event

Source documents

Analysis

Reporting Trial balance Recording & posting

Account Title
Left Side Right Side

Account Title
Date Item Post Ref Debit

Account No. ### Balance Credit Debit Credit

Assets

Liabilities

Owners Equity

Capital Stock

Retained Earnings

The Accounting Equation A = L + OE

Revenue

-Expenses

Net Income

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C7

Learning Objective

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Define debits and credits and explain their role in double-entry accounting.

Conceptual

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Debits
Debit comes from Latin and merely means left, or the lefthand side of an account. Abbreviated DR.

Account Title
Left Side
We need to stop here and change our way of thinking!

Debit Side

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Credits
Credit also comes from the Latin, and means right, or the righthand side of an account. Abbreviated CR.

Account Title
Right Side
Lets stop here and modify our thinking at least for this class!

Credit Side

So, how can we use this?

Thats a good question!

Accounts actually provide two equalities or balances . . .

Assets

The algebraic relationship in the fundamental accounting model.

Liabilities

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Owners Equity

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Account Title

Debit Credit

Always

Assets
DR CR

Liabilities
DR CR

Owners Equity
DR CR

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The Second Equality . . .

Debits Credits

The algebraic relationship between account increases and decreases.

Debit-Credit Rules . . .
Account
Assets
Liabilities Inc. Dec.

Debit
Credit

Credit
Debit

Owners Equity
Revenue

Credit
Credit

Debit
Debit

Expenses

Debit

Credit

Debit-Credit Rules . . .
Debits Increase Assets Expenses
Liabilities Equity Revenue

Credits
Liabilities Equity Revenue

Decrease

Assets Expenses

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Basic Facts About Accounts

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For every transaction there must be at least one debit and one credit;

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Debits must always equal credits for each transaction, and;

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Debits are always entered on the left side of an account and credits on the right side.

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Accounts increased with a debit: Assets Expenses Accounts increased with a credit: Liabilities Revenues

Dividends

Capital

P1

Learning Objective

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Record transactions in a journal and post entries to a ledger.

Procedural

Steps in Processing Transactions

COMPRA DE EQUIPO POR 30 MIL CASH
Assets
(3)

Liabilities

Equity

Equipment 30,000

Step 1: Examine source documents.

ACCOUNT NAME:
Date

Step 2: Analyze transactions.

GENERAL JOURNAL
Page
Post. Ref. Debit

123
Credit

EQUPO
Description PR

ACCOUNT No.
Debit Credit

02
Balance

ACCOUNT NAME: CASH

Date Description PR

ACCOUNT No. 01
Debit Credit Balance

Date

Description

Step 4: Record the journal information in a ledger.

Step 4: Record the journal information in a ledger.

Step 3: Record transactions in a journal.

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General Journal
Date Jan Description 6 Art Supplies Office Supplies Accounts Payable
Purchase of art and office supplies on credit

Page 1 Debit 1,800 800 2,600 Credit

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PR

COMPRA DE SUPPLIES DE ARTE POR $1,800 Y SUPPLIES DE OFICINA POR $800 A CREDITO

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Journals . . .
A journal contains a chronological record of the transactions of a business.

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Advantages
Sets forth transactions of each day.
Records transactions in chronological order. Shows the analysis of each transaction in terms of debit and credit effects. Supplies an explanation of each transaction

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Advantages
Serves as a source for future reference to accounting transactions.
Removes lengthy explanations from the ledger accounts. Makes posting the ledger at convenient times possible.

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Advantages
Assists in keeping the ledger in balance.
Aids in tracing errors. Promotes the division of labor.

General Journal for Fast Forward

Transaction Date Titles of Affected Accounts
Page 1
Debit 30,000 30,000 Credit

GENERAL JOURNAL
Date 2001 Dec. 1 Cash Description PR

Common Stock Issuance of stock

Dec. 2 Supplies 2,500 Transaccin Cantidad en Dolares 2,500 Cash explicada debitos y creditos Purchased store supplies for$30,000 cash SE EMITEN EN ACCIONES COMUNES PARA UTILIZARLOS COMO FONDOS OPERACIONALES DEL NEGOCIO

Balance Column Ledger

T-accounts are useful illustrations, but balance column ledger accounts are used in practice.
CASH
Date 2001 Dec. 1 Dec. 2 Dec. 3 Dec. 10 Description PR G1 G1 G1 G1 Debit

ACCOUNT No.
Credit

101
Balance

Issuance of stock Purchased supplies Purchased equipment Collection from customer

30,000 2,500 26,000 1,900

30,000 27,500 1,500 3,400

Balance Column Ledger

Note the the t-account tool is derived from the debit and credit columns of the ledger.
CASH
Date 2001 Dec. 1 Dec. 2 Dec. 3 Dec. 10 Description PR G1 G1 G1 G1 Debit

ACCOUNT No.
Credit

101
Balance

Issuance of stock Purchased supplies Purchased equipment Collection from customer

30,000 2,500 26,000 1,900

30,000 27,500 1,500 3,400

Balance Column Ledger

The last line in the balance column shows the current balance in the account.

Exh. 2.16

CASH
Date 2001 Dec. 1 Dec. 2 Dec. 3 Dec. 10 Description PR G1 G1 G1 G1 Debit

ACCOUNT No.
Credit

101
Balance

Issuance of stock Purchased supplies Purchased equipment Collection from customer

30,000 2,500 26,000 1,900

30,000 27,500 1,500 3,400

Posting Journal Entries - Example

GENERAL JOURNAL
Date 2001 Dec. 1 Cash Description PR Debit 30,000 30,000

Page 1
Credit

Common Stock Issuance of stock Dec. 2 Identify Supplies the account. Cash CASH Purchased store supplies for cash Date Description PR

2,500

ACCOUNT No.
Debit Credit

2,500

101

Balance

2001

Dec. 3

Purchased equipment

G1

20,000.00

########

Posting Journal Entries - Example

GENERAL JOURNAL
Date 2001 Dec. 1 Cash Description PR Debit 30,000 30,000

Page 1
Credit

Common Stock Issuance of stock 2 Supplies Enter the date. 2 Dec. 2,500

CASH
Date 2001 Dec. 1 Dec. 3

Cash Purchased store supplies for cash Description

ACCOUNT No.
PR Debit Credit

2,500

101

Balance

Purchased equipment

G1

20,000.00

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Posting Journal Entries - Example

GENERAL JOURNAL
Date 2001 Dec. 1 Cash Description PR Debit 30,000 30,000

Page 1
Credit

Common Stock Issuance of stock Dec. 2 Supplies Enter the Cash CASH Purchased store supplies for cash Date Description PR

amount.
Debit

3 2,500
2,500

ACCOUNT No.
Credit

101

Balance

2001 Dec. 1 Dec. 3

Issuance of stock Purchased equipment

G1

30,000 20,000 (20,000)

Posting Journal Entries - Example

GENERAL JOURNAL
Date 2001 Dec. 1 Cash Description PR Debit 30,000 30,000

Page 1
Credit

Common Stock Issuance of stock Dec. 2 Supplies Enter the journal Cash CASH Purchased store supplies for cash Date Description

reference.
PR G1 G1 Debit

4 2,500

ACCOUNT No.
Credit

2,500

101

Balance

2001 Dec. 1 Dec. 3

Issuance of stock Purchased equipment

30,000 20,000 (20,000)

Posting Journal Entries - Example

GENERAL JOURNAL
Date 2001 Dec. 1 Cash Description PR Debit 30,000 30,000

Page 1
Credit

Common Stock Issuance of stock Dec. 2 SuppliesCompute the balance. Cash CASH Purchased store supplies for cash Date Description PR Debit 2,500

ACCOUNT No.
Credit

2,500

101

Balance

2001 Dec. 1 Dec. 3

Issuance of stock Purchased equipment

G1 G1

30,000 20,000

30,000 (20,000)

Posting Journal Entries - Example

GENERAL JOURNAL
Date 2001 Dec. 1 Cash Description PR 101 Debit 30,000 30,000

Page 1
Credit

Common Stock Issuance of stock Dec. 2 Supplies 2,500 Enter the ledger reference. Cash CASH Purchased store supplies ACCOUNT No. for cash Date Description PR Debit Credit

6
2,500

101

Balance

2001 Dec. 1 Dec. 3

Issuance of stock Purchased equipment

G1 G1

30,000 20,000

30,000 (20,000)