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.
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.
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.
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.