9.

15 Accounting

Chapter 2 The Recording Process

1. The Account
a. Debits and Credits
b. Equity Relationships
c. Summary of Debit / credit rules
2. Steps in the Recording Process
a. Journal
b. Ledger
c. Posting
3. The Recording Process Illustrated
a. Summary illustration of journalizing and posting
4. The Trial Balance
a. Limitations of a trail balance
b. Locating errors
c. Use of currency signs

The ACCOUNT
Debits and Credits
Double Entry System Each transaction must affect two or more accounts to
keep the basic accounting equation in BALANCE

Debit indicates the left side of an account and credit indicates the right side. Dr. and
Cr.
We use the term debit and redit repeatedly in the recording process to describe
where entries are made in accounts. `

The EQUATION must be in balance after every transaction. For every DEBIT there
must be a credit.
Steps in Recording Process
The Journal
Books of original entry
Transactions recorded in Chronological order
Contributions to the recording process:
Discloses the Complete effects of a transaction.
Provides a chronological record of transactions
Helps to prevent or locate errors because the debit and credit amounts
can be easily compared

On September 1, shareholders invested 15,000 cash in the corporation in

exchange for share of stock, and Softbyte purchased computer equipment for
7,000 cash

The Ledger
1. General Ledger contains the entire group of accounts maintained by a
company
a. Individual Assets
i. Equipment
ii. Land
iii. Supplies
iv. Cash
b. Individuals liabilities
i. Interest payables
ii. Salaries payables
iii. Accounts payable
iv. Notes payables
c. Individual Equity
i. Salaries expense
ii. Service revenue
iii. Retained earnings
iv. Share capital ordinary
Posting
1. Process of transferring amounts from the journal to the ledger accounts

Chart of Accounts
Accounts and account numbers arranged in sequence in which they are presented
in the financial statements.

OCTOBER 6 th MIDterm exam.

The Recording Process illustrated

1. Determine what type of account is involved
2. Determine what items increased or decreased and by how much
3. Translated the increases and decreases into debits and credits

Notes payable = is a written promises that has amounts and time of such promises.
Interests must be included.

Chapter 3 is very important for us

Octoboer 6th Midterm (chapter 1-4)