Slide #1.

Chapter ACCT 201 ACCT 201 2 Accounting Information System ACCT 201 UAA – ACCT 201 Principles of Financial Accounting Dr. Fred Barbee
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Slide #2.

Chapter ACCT 201 ACCT 201 2 Accounting Information System ACCT 201 First . . . A brief review of Day #2 Topics.
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Slide #3.

ACCT 201 ACCT 201 ACCT 201
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Slide #4.

ACCT 201 Debits and Credits ACCT 201 The debit/credit convention or coding system is very simple. ACCT 201 Do not make it difficult because you cannot accept its simplicity.
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Slide #5.

ACCT 201 Debits ACCT 201 Debit comes from Latin and merely means “left,” or the “left-hand” side of an account. Abbreviated “DR.” ACCT 201
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Left Side Account Title Debit Side We need to stop here and change our way of thinking!
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Symbolically, let’s erase that memory C:\memory\debit\erase *.* All files in directory will be deleted Are you sure (Y/N)?
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Slide #8.

ACCT 201 Credits ACCT 201 Credit also comes from the Latin, and means “right,” or the “right-hand” side of an account. Abbreviated “CR.” ACCT 201
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Slide #9.

Account Title Let’s stop here and modify our thinking – at least for this class! Right Side Credi t Side
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Slide #10.

Symbolically, let’s erase that memory C:\memory\credit\erase *.* All files in directory will be deleted Are you sure (Y/N)?
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Slide #11.

ACCT 201 ACCT 201 Assets The algebraic relationship in the fundamental accounting model. Liabilities ACCT 201 Owners’ Equity
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Slide #12.

ACCT 201 Account Title ACCT 201 Debi Credit t ACCT 201 Alway
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Slide #13.

Assets DR CR Liabilitie Owners’ DR sCR Equity DR CR
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Slide #14.

ACCT 201 The Second Equality . . . ACCT 201 Debits Credits ACCT 201 The algebraic relationship between account increases and decreases.
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Slide #15.

Debit-Credit Rules . . . Account Inc. Dec. Assets Debit Credit Liabilities Credit Debit Owners’ Equity Credit Debit Revenue Credit Debit Expenses Debit Credit
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Slide #16.

Debit-Credit Rules . . . Debits Credits Increase Assets Expenses Liabilities Equity Revenue Decrease Liabilities Equity Revenue Assets Expenses
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Slide #17.

ncrease ebits xpense s ssets
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Slide #18.

evenues quity iabilities ncrease redits
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Slide #19.

Steps in Processing Transactions Assets Assets Step 1: Examine source documents. Liabilities Liabilities + Equity Equity Step 2: Analyze transactions. ACCOUNT NAME: Date Step 5: Prepare a trial balance. = ACCOUNT No. Description PR Debit Credit Balance Step 4: Record the journal information in a ledger. Step 3: Record transactions in a journal.
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Slide #20.

ACCT 201 ACCT 201 General Journal Date Jan Description 6 Art Supplies ACCT 201 Office Supplies PR Page 1 Debit Credit 1,800 800 Accounts Payable Purchase of art and office supplies on credit 2,600
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Slide #21.

General Journal for FastForward Transaction Date Transaction explanation Titles of Affected Accounts Dollar amount of debits and credits
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Slide #22.

Balance Column Ledger T-accounts are useful illustrations, but balance column ledger accounts are used in practice.
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Slide #23.

Posting Journal Entries Example 1 Identify the account.
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Slide #24.

Posting Journal Entries Example 2 Enter the date.
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Slide #25.

Posting Journal Entries Example Enter the amount. 3
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Slide #26.

Posting Journal Entries Example Enter the journal reference. 4
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Slide #27.

Posting Journal Entries Example Compute the balance. 5
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Slide #28.

Posting Journal Entries Example Enter the ledger reference. 6
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Slide #29.

Chapter ACCT 201 ACCT 201 2 Accounting Information System ACCT 201 Text Section: Trial Balance (p. 63)
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Slide #30.

ACCT 201 ACCT 201 P 2 Learning Objective Prepare and explain the use of a trial balance. ACCT 201 Procedural
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Slide #31.

ACCT 201 Trial Balance ACCT 201 A Trial Balance is a listing of all accounts and their balances at a point in time. ACCT 201
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Slide #33.

Chapter ACCT 201 ACCT 201 2 Accounting Information System ACCT 201 Text Section: Unadjusted Financial Statements (p. 68)
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Slide #34.

ACCT 201 ACCT 201 P 3 Learning Objective ACCT 201 Prepare unadjusted financial statements from business transactions. Procedural
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Slide #35.

ACCT 201 Income Statement ACCT 201 A statement showing revenues and expenses for a period of time. Revenues = Inflows of assets in exchange for products and services provided to customers. ACCT 201 Expenses = Outflows or the using up of assets that result from providing products and services to customers.
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Slide #36.

Exh. 2.19
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Slide #37.

ACCT 201 Statement of Retained Earnings ACCT 201 A statement showing additions to (net income) and deductions from (net loss, dividends) the Retained Earnings account. ACCT 201
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Slide #38.

Exh. 2.19
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Slide #39.

ACCT 201 Balance Sheet ACCT 201 A statement showing the balances in asset, liability, and equity accounts at a point in time. ACCT 201
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Slide #40.

Exh. 2.19
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Slide #41.

ACCT 201 Statement of Cash Flows ACCT 201 A statement showing the sources and uses of funds relating to the Operating Investing, and ACCT 201 Financing Activities of a company.
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Slide #42.

Exh. 2.19
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Slide #43.

Formatting Conventions ACCOUNT NAME: Date ACCOUNT No. Description PR Debit Credit Balance Rounding Rounding Generally, Generally, dollar dollarsigns signs ($) ($) are are not not used used in in the the journals journals or orledgers. ledgers. Round Round numbers numbers in in financial financial statements statements to to the the nearest nearest dollar. dollar.
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Slide #44.

Chapter ACCT 201 ACCT 201 2 Accounting Information System ACCT 201 Text Section: Decision Analysis (p. 70)
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Slide #45.

ACCT 201 ACCT 201 A 2 Learning Objective ACCT 201 Analyze the impact of transactions on accounts and financial statements. Analytical
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Slide #46.

ACCT 201 ACCT 201 A 3 Learning Objective ACCT 201 Compute return on equity and use it to analyze company performance. Analytical
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Slide #47.

ACCT 201 Using the Information Return on Equity ACCT 201  Describes the relationship between net income for the period and average equity. ACCT 201  Helps an owner judge the compnay’s profitability compared to other business or personal opportunities.
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Slide #48.

ACCT 201 ACCT 201 A 4 Learning Objective ACCT 201 Compute the debt ratio and describe its use in analyzing company performance. Analytical
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Slide #49.

The End
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