derstanding

tastic
ancial
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ACCT 201 ACCT 201 ACCT 201
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ACCT 201

Learning Accounting

If you want to learn

ACCT 201

accounting, you learn it one

concept at a time, one
principle at a time.
ACCT 201
 C1 Learning
ACCT 201

Objective
ACCT 201

Explain the financial

reporting environment
ACCT 201

Conceptual
 The Accounting System:
A Conceptual Overview

Operating Environment
Entity B Entity C

Business Entity A
System Inputs: System Outputs:
Measurable Process and Financial
Transactions Summarize Statements
and Events and Reports

Entity D Entity E
Financial Reporting Environment

FASB GAAP

Financial
Statements
Preparers

Audit
Report Decision makers
Auditors

ASB
GAAS
Independent Management Management
Auditor Prepares
1
A
3 A
P Income Statement
Balance Sheet
Auditors G
S Statement of
Cash Flows
G
A
A
Lends Basic
Credibility Mistrust
Users
4 2
International Accounting Principles
Despite our growing global economy,
countries continue to maintain their
unique set of acceptable accounting
practices.
 C2 Learning
ACCT 201

Objective
ACCT 201

Identify, explain, and apply

accounting principles.
ACCT 201

Conceptual
 A business
continues operation
instead of being
closed or sold.

Financial Statement
A business is information is
accounted for supported by
separately from its independent,
owner(s). unbiased evidence.
 Express
transactions and
events in monetary
units.

Financial statements are based on

actual costs incurred in business
transactions.
ACCT 201

Accounting
2
Chapter

Information
System
ACCT 201

Text Section:
ACCT 201

Transactions,
Documents, and Accounts (p.
41)
 C3 Learning
ACCT 201

Objective
ACCT 201

Identify, explain, and apply

accounting principles.
ACCT 201

Conceptual
 Exh.
2.2

The Accounting Process

Source
Transaction documents Analysis
or event

Reporting
Trial balance Recording &
posting
 Transactions and Events
Exchanges of economic consideration
between two parties.
External Transactions
occur between the
organization and an
outside party.

Internal Transactions
occur within the
organization.
 Accounting Information System

Ongoing Boundary
events in
world
Recording Data Bank

Information Classifying
 C4 Learning
ACCT 201

Objective
ACCT 201

Describe source documents

and their purpose.
ACCT 201

Conceptual
Source Documents

Other
Invoices
Bank Statement

Journal
Check
Stubs
 C5 Learning
ACCT 201

Objective
ACCT 201

Describe an account and

its uses in recording
transactions.
ACCT 201

Conceptual
ACCT 201

Account
A storage unit used to classify and
ACCT 201

summarize money measurements of

business activity of a similar nature.
ACCT 201
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The Account

Detailed record of increases

ACCT 201

and decreases in specific

assets, liabilities, equities,
revenues, or expenses.
=======================
ACCT 201

Separate accounts are maintained for

each item of importance.
The General Ledger
Accts Rec.
Inventory
General
Cash
Ledger

Notes Pay. Revenue

Mortgage Expenses
Accts Pay. Retained
Earnings
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 Account Title

Left Side Right Side

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The Formal
Account
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The Balance Column

ACCT 201

Ledger
Account Title Account No. ###

Post Balance
Date Item Ref Debit Credit Debit Credit
ACCT 201

Accounting
2
Chapter

Information
System
ACCT 201

Text Section:
ACCT 201

Transactional Analysis
and the Accounting Equation
(p. 46)
 A1 Learning
ACCT 201

Objective
ACCT 201

Analyze business
transactions using the
accounting equation.
ACCT 201

Analytical
 Owners’
Assets = Liabilities + Equity

Capital Retained
Stock Earnings

The
Revenue -Expenses
Accounting
Equation = Net
Income
A = L + OE
ACCT 201
Analyzing Transactions

1. Analyze the transaction and its

source.
ACCT 201

2. Identify the impact of the

transaction on account balances.
ACCT 201

3. Identify the financial

statements that are impacted
by the transaction.
“One must learn by doing
the thing; though you think
you know it, you have no
certainty until you try it.”

Publilius Syrus, Moral Sayings