TAILIEUCHUNG - Lecture Introduction to financial accounting - Chapter 3: Recording transactions

Chapter 3 - Recording transactions. Recording transactions related to the purchase and sale of merchandize inventory was introduced and discussed in Chapter 5. This chapter reviews how the cost of goods sold is calculated using various inventory cost flow assumptions. Additionally, issues related to merchandize inventory that remains on hand at the end of an accounting period are also explored. | Collects, organizes and processes transaction data Transaction is an event that results in a change of a balance sheet item. Typically it is an exchange. (Asset, liability, stock, revenue or expense for one another.) 1 3 Step 1: Accumulate facts. Step 2: Determine effects on accounting equation Note: Algebra requires that you keep the equality! Steps in transaction analysis: 2 Transaction Analysis Two or more items will always be affected Example: (1) Owner invested $10,000 Cash in exchange for $10,000 of Common Stock 3 Example: (2) Borrowed $5,000 by issuing a bond. (2) + $5,000 + $5,000 __ $15,000 = $5,000 +$10,000 Bonds Payable 4 Transaction Analysis TRANSACTION ANALYSIS examples Business buys a computer, paying cash. Increase and Decrease Business provides service to a customer and is paid cash. Increase and Increases Contractor works and business pays cash for service. Decrease and Decreases 5 TRANSACTION ANALYSIS examples Business applies & gets a corporate credit card account. Business takes out an advertisement that runs today in the newspaper and charges the cost to the credit card. Increase and Decreases Business pays off credit card . Decrease and Decrease 6 TRANSACTION ANALYSIS examples Business provides services to a customer but allows them 30 days to pay. Increase and Increases 30 days later customer pays off amount due in full. Increase and Decrease Business pays cash dividend to Owners. Decrease and Decreases 7 Lowest level of detail in accounting. Records increases and decreases for a specific Asset, Liability, or Stockholders’ Equity item. Number of accounts used depends on facts and personal desires of the accountant & management. How much detail do they want on the financial statements? 8 Account is . . . . Account Detail example Consider the options in accounts used to record the purchase of an Apple computer: Equipment. If used, other computers, printers, photocopiers, factory machines all will be grouped into one account.

• Kế toán - Kiểm toán
• Financial accounting
• Lecture Introduction to financial accounting
• Financial statements
• Recording transactions
• Transaction analysis
• Accounting mathematics
• Issues in financial accounting
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• Accounting standards
• Financial reporting
• Financial Accounting Standards Board
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• Reporting financial results
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• Business firms
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• Accounting conventions
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• Accounting for cash
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• Computing uncollectible accounts expense
• Long term debt
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• Paper F3
• Revision kit 2016
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• Language of business
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• Cash discounts
• The accounting cycle
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• Classified balance sheet