Chapter 6 Business Transactions & Their Analysis Learning Objectives 1. Describe the nature and give examples of business transactions. 2. Identify the different types of business documents. 3. Analyze common business transactions using the rules of debit and credit.
Chapter 6: Business Transcations & Their
Analysis (FAR by: Millan) Steps in the Accounting cycle 1. Identifying and analyzing 2. Journalizing 3. Posting 4. Unadjusted trial balance 5. Adjusting entries 6. Adjusted trial balance (and/or Worksheet) 7. Financial statements 8. Closing entries 9. Post-closing trial balance 10. Reversing entries Chapter 6: Business Transcations & Their Analysis (FAR by: Millan) Identifying and analyzing transactions and events • Only accountable events are recorded. Accountable events are those that affect the assets, liabilities, equity, income or expenses of the business. • Accountable events are normally identified from source documents, such as sales invoice, official receipts, delivery receipts, and the like.
Chapter 6: Business Transcations & Their Analysis (FAR by: Millan)
Types of Events 1. External events – are transactions that involve the business and another external party. 2. Internal events – are events that do not involve an external party.
Chapter 6: Business Transcations & Their Analysis (FAR by: Millan)
Journalizing Journalizing refers to recording an identified accountable event in the journal by means of a journal entry.
Chapter 6: Business Transcations & Their Analysis (FAR by: Millan)
Simple and Compound journal entries
• Simple journal entry – contains a single
debit and a single credit element. • Compound journal entry – contains two or more debits or credits.
Chapter 6: Business Transcations & Their Analysis (FAR by: Millan)