Professional Documents
Culture Documents
CH 02
CH 02
IFRS EDITION
Prepared by
Coby Harmon
University
2-1
of California, Santa Barbara
Westmont College
PREVIEW OF CHAPTER 2
Financial Accounting
IFRS 3rd Edition
Weygandt ● Kimmel ● Kieso
2-2
CHAPTER
Account Name
An account can Debit / Dr. Credit / Cr.
be illustrated in a
T-account form.
2-4 LO 1
Debits and Credits
Learning
DEBIT AND CREDIT PROCEDURES Objective 2
Define debits and
credits and
Double-entry system explain their use
in recording
◆ Each transaction must affect two or more business
transactions.
accounts to keep the basic accounting
equation in balance.
2-5 LO 2
Debits and Credits
Account Name
Debit / Dr. Credit / Cr.
Balance $15,000
2-6 LO 2
Debits and Credits
Account Name
Debit / Dr. Credit / Cr.
Balance $1,000
2-7 LO 2
Debits and Credits
increase side.
Liabilities
Debit / Dr. Credit / Cr.
Normal Balance
Chapter
3-24
2-8 LO 2
Debits and Credits
2-9 LO 2
Debits and Credits
Normal Balance
Chapter
3-27
2-10 LO 2
Debits and Credits
Liabilities
Debit / Dr. Credit / Cr.
Normal Normal
Balance Balance
Debit Credit Normal Balance
Assets Chapter
3-24
Equity
Debit / Dr. Credit / Cr.
Debit / Dr. Credit / Cr.
Normal Balance
Normal Balance
Chapter
3-23
Expenses Chapter
3-25
Revenues
Debit / Dr. Credit / Cr.
Debit / Dr. Credit / Cr.
Normal Balance
Normal Balance
Chapter
3-27 Chapter
3-26
2-11
LO 2
Summary of Debit/Credit Rules
Statement of
Financial Position Income Statement
Asset = Liability + Equity Revenue - Expense
Debit
Credit
2-12 LO 2
Summary of Debit/Credit Rules
Question
Debits:
2-13 LO 2
Summary of Debit/Credit Rules
Question
Accounts that normally have debit balances are:
2-14 LO 2
INVESTOR INSIGHT Keeping Score
2-15 LO 2
Equity
Relationships
Illustration 2-11
Equity relationships
2-16 LO 2
Summary of Debit/Credit Rules
2-17 LO 2
The Account
Learning
Business documents, such as a sales Objective 3
Identify the basic
receipt, a check, or a bill, provide evidence steps in the
of the transaction. recording
process.
2-18 LO 3
Steps in the Recording Process
Learning
The Journal Objective 4
Explain what a
journal is and
◆ Book of original entry. how it helps in
the recording
◆ Transactions recorded in chronological process.
order.
GENERAL JOURNAL
Equipment 7,000
Cash 7,000
2-20 LO 4
The Journal
GENERAL JOURNAL
2-21 LO 4
> DO IT!
Illustration 2-16
The general ledger
2-24 LO 5
The Ledger
2-25 LO 5
Posting
Learning
Objective 6
Explain what
posting is and
how it helps in
the recording
process.
Transferring
journal entries
to the ledger
accounts.
Illustration 2-18
Posting a journal
entry
2-26 LO 6
Posting
Question
Posting:
2-27 LO 6
Illustration 2-19
Chart of accounts for Yazici Advertising A.S¸ .
2-28 LO 6
The Recording Process Illustrated
2-29 LO 6
Illustration 2-21
2-30 Purchase of office equipment LO 6
Illustration 2-22
Receipt of cash
for future service
2-31 LO 6
2-32 Illustration 2-23
Payment of monthly rent LO 6
Illustration 2-24
Payment for
insurance
2-33 LO 6
2-34 Illustration 2-25
Purchase of supplies on credit LO 6
The Recording Process Illustrated
Illustration 2-26
Hiring of employees
2-35 LO 6
Illustration 2-27
2-36 Declaration and payment of dividend LO 6
Illustration 2-28
2-37
Payment of salaries LO 6
2-38 Illustration 2-29
Receipt of cash for services performed LO 6
2-39 Illustration 2-30 LO 6
General journal entries
Illustration 2-30
General journal entries
2-40 LO 6
Illustration 2-31
General ledger
2-41 LO 6
The Trial Balance
Learning
A trial balance Objective 7
Prepare a trial
◆ is a list of accounts and their balances balance and
explain its
at a given time. purposes.
2-42 LO 7
Trial Balance
Illustration 2-32
A trial balance
2-43 LO 7
Limitations of a Trial Balance
2-44 LO 7
Currency Signs and Underlining
Currency 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.
2-45 LO 7
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2-46