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Lecture 2 Part 1 - PPT
Lecture 2 Part 1 - PPT
Lecture 2 Part 1 - PPT
2-1
CHAPTER
Account Name
An account can be Debit / Dr. Credit / Cr.
illustrated in a T-
account form.
2-3 LO 1
Debits and Credits
Learning
DEBIT AND CREDIT PROCEDURES Objective 2
Define debits and
credits and explain
Double-entry system their use in
recording business
Each transaction must affect two or more transactions.
2-4 LO 2
Debits and Credits
Account Name
Debit / Dr. Credit / Cr.
Balance $15,000
2-5 LO 2
Debits and Credits
Account Name
Debit / Dr. Credit / Cr.
Balance $1,000
2-6 LO 2
Debits and Credits
3-23
increase side.
Liabilities
Debit / Dr. Credit / Cr.
Normal Balance
Chapter
3-24
2-7 LO 2
Debits and Credits
2-8 LO 2
Debits and Credits
Normal Balance
Chapter
3-27
2-9 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
2-10
LO 2
Equity
Relationships
Illustration 2-11
Equity relationships
2-11 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.
2-12 LO 3
Steps in the Recording Process
Learning
The Journal Objective 4
Explain what a
journal is and how
Book of original entry. it helps in the
recording
Transactions recorded in chronological process.
order.
2-13 LO 4
The Journal
GENERAL JOURNAL
Equipment 7,000
Cash 7,000
2-14 LO 4
The Journal
GENERAL JOURNAL
2-15 LO 4
> DO IT!
Illustration 2-16
The general ledger
2-18 LO 5
The Ledger (General ledger)
STANDARD FORM OF ACCOUNT Illustration 2-17
Three-column form
of account
Transferring
journal entries
to the ledger
accounts.
Illustration 2-18
Posting a journal
entry
2-20 LO 6
The Recording Process Illustrated
2-21 LO 6
Illustration 2-21
2-22 Purchase of office equipment LO 6
Illustration 2-22
Receipt of cash
for future service
2-23 LO 6
2-24 Illustration 2-23
Payment of monthly rent LO 6
Illustration 2-24
Payment for
insurance
2-25 LO 6
2-26 Illustration 2-25
Purchase of supplies on credit LO 6
The Recording Process Illustrated
Illustration 2-26
Hiring of employees
2-27 LO 6
Illustration 2-27
2-28 Declaration and payment of dividend LO 6
Illustration 2-28
2-29
Payment of salaries LO 6
2-30 Illustration 2-29
Receipt of cash for services performed LO 6
> DO IT!
Como Company SpA recorded the following transactions in a general
journal during the month of March. Post these entries to the Cash
account.
2-31 LO 6
2-32 Illustration 2-30 LO 6
General journal entries
Illustration 2-30
General journal entries
2-33 LO 6
Illustration 2-31
General ledger
2-34 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.
2-35 LO 7
Trial Balance
Illustration 2-32
A trial balance
2-36 LO 7
Limitations of a Trial Balance
2-37 LO 7
> DO IT!
2-38 LO 7
2-39 LO 7
Summary of Debit/Credit Rules
Question
Debits:
2-40 LO 2
Summary of Debit/Credit Rules
Question
Accounts that normally have debit balances are:
2-41 LO 2
> DO IT!
Kate Browne, president of Hair It Is Company SA, has just rented
space in a shopping mall in which she will open and operate a beauty
salon. A friend has advised Kate to set up a double-entry set of
accounting records in which to record all of her business transactions.
Identify the balance sheet accounts that Hair It Is Company will
likely use to record the transactions needed to establish and open the
business. Also, indicate whether the normal balance of each account
is a debit or a credit.
Assets Liabilities Equity
2-42 LO 2