Quản trị Kinh doanh - Chapter 2: Analyzing and recording transactions

Analyzing and Recording TransactionsCopyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education1Chapter 2PowerPoint Editor: Beth Kane, MBA, CPAWild, Shaw, and ChiappettaFundamental Accounting Principles22nd Edition  02-C1: Analyzing and Recording Process 2C 1Analyzing and Posting ProcessThe accounting process identifies business transactions and events, analyzes and records their effects, and summarizes and presents information in reports and financial statements. These reports and statements are used for making investing, lending, and other business decisions. 3Sales TicketsBank StatementsPurchase OrdersChecksSource DocumentsBills from SuppliersEmployee EarningsRecordsC 14 02-C2: The Account and Its Analysis 5An account is a record of increases and decreases in a specific asset, liability, equity, revenue, or expense item.The Account and Its AnalysisThe general ledger is a record containing all accounts used by the company. C 26The Account and Its AnalysisC 27LandEquipmentBuildingsCashNotes ReceivableSuppliesPrepaid AccountsAccounts ReceivableAssetAccountsAsset AccountsC 28Accrued LiabilitiesUnearned RevenueNotes PayableAccounts PayableLiabilityAccountsLiability AccountsC 29EquityAccountsRevenuesOwner’s CapitalOwner’s WithdrawalsExpensesEquity AccountsC 210The Account and Its AnalysisC 2Revenues and owner’s contributions increase equity. Expenses and owner’s withdrawals decrease equity.11NEED-TO-KNOWClassify each of the following as assets (A), liabilities (L), or equity (EQ).1)Prepaid Rent2)Owner, Capital3)Note Receivable4)Accounts Payable5)Accounts Receivable6)Equipment7)Interest Payable8)Unearned Revenue9)Land10)Prepaid InsuranceKey words to look for in account titles:PrepaidAlways an assetReceivableAlways an assetPayableAlways a liabilityUnearnedAlways a liability(L) Liability(L) Liability(A) Asset(A) Asset(A) Asset(EQ) Equity(A) Asset(L) Liability(A) Asset(A) AssetC 212 02-C3: Ledger and Chart of Accounts 13Ledger and Chart of AccountsThe ledger is a collection of all accounts for aninformation system. A company’s size and diversityof operations affect the number of accounts needed.The chart of accounts is a list of all accounts and includes anidentifying number for each account.C 314 02-C4: Debits and Credits 15Debits and CreditsA T-account represents a ledger account and is a tool used to understand the effects of one or more transactions. C 416LiabilitiesEquityAssets=+Double-Entry AccountingC 417Double-Entry AccountingC 4Here is the expanded accounting equation showing the equity section. 18Double-Entry AccountingAn account balance is the difference between the increases and decreases in an account. Notice the T-Account.C 419NEED-TO-KNOWIdentify the normal balance (debit [Dr] or credit [Cr]) for each of the following accounts.1)Prepaid Rent2)Owner, Capital3)Note Receivable4)Accounts Payable5)Accounts Receivable6)Equipment7)Interest Payable8)Unearned Revenue9)Land10)Prepaid Insurance=+IncreaseDecreaseDecreaseIncreaseDecreaseIncreaseWithdrawalsInvestmentsExpensesRevenuesNormalNormal↑ EquityInvestmentsNormal↑ EquityRevenuesNormal↓ EquityWithdrawalsNormal↓ EquityExpensesNormalRevenuesOwner, WithdrawalsExpensesDr. DebitDr. DebitAssetsLiabilitiesEquityOwner, CapitalDr. DebitCr. CreditDr. DebitDr. DebitCr. CreditCr. CreditDr. DebitCr. CreditDebitsCreditsDebitsCreditsDebitsCreditsC 420 02-P1: Journalizing and Posting Transactions 21Journalizing and Posting TransactionsP 122Dollar amount of debits and creditsJournalizing TransactionsTransaction DateTransaction explanationTitles of Affected AccountsP 123Balance Account ColumnT-accounts are useful illustrations, but balance column ledger accounts are used in practice.P 124Posting Journal Entries 25P 1 02-A1: Analyzing Transactions 26Analyzing TransactionsA 1Double-entry accounting is useful in analyzing and processing transactions. Analysis of each transaction follows these four steps.27Analyzing TransactionsA 128Analyzing TransactionsA 129Analyzing TransactionsA 130Analyzing TransactionsA 131Analyzing TransactionsA 132NEED-TO-KNOWJan. 1Jamsetji invested $4,000 cash in the Tata company.Jan. 5The company purchased $2,000 of equipment on credit.Jan. 14The company provided $540 of services for a client on credit.Assume Tata began operations on January 1 and completed the following transactions during its first month of operations. For each transaction, (a) analyze the transaction using the accounting equation, (b) record the transaction in journal entry form, and c) post the entry using T-accounts to represent the general ledger accounts.A 133NEED-TO-KNOWJan. 1Jamsetji invested $4,000 cash in the Tata company.a) AnalyzeAssets = Liabilities + Equity+ $4,000+ $4,000b) RecordDateGeneral JournalDebitCreditJan. 1Cash4,000Jamsetji, Capital4,000c) PostJan. 14,000Jan. 14,000Jamsetji, CapitalCash=+IncreaseDecreaseDecreaseIncreaseDecreaseIncreaseOwner, WithdrawalsOwner InvestmentsExpensesRevenuesNormalNormalAssetsLiabilitiesEquityDebitsCreditsDebitsCreditsDebitsCreditsA 134NEED-TO-KNOWJan. 5The company purchased $2,000 of equipment on credit.a) AnalyzeAssets = Liabilities + Equity+ $2,000+ $2,000b) RecordDateGeneral JournalDebitCreditJan. 5Equipment2,000Accounts Payable2,000c) PostJan. 52,000Jan. 52,000EquipmentAccounts Payable=IncreaseDecreaseDecreaseIncreaseNormalNormalAssetsLiabilitiesDebitsCreditsDebitsCredits+DecreaseIncreaseOwner, WithdrawalsOwner InvestmentsExpensesRevenuesEquityDebitsCreditsA 135NEED-TO-KNOW=IncreaseDecreaseDecreaseIncreaseNormalNormalAssetsLiabilitiesDebitsCreditsDebitsCreditsJan. 14The company provided $540 of services for a client on credit.a) AnalyzeAssets = Liabilities + Equity+ $540+ $540b) RecordDateGeneral JournalDebitCreditJan. 14Accounts receivable540Services revenue540c) PostJan. 14540Jan. 14540Accounts receivableServices revenue+DecreaseIncreaseOwner, WithdrawalsOwner InvestmentsExpensesRevenuesEquityDebitsCreditsA 136 02-P2: Preparing a Trial Balance 37Preparing the Trial BalancePreparing a trial balance involves three steps:List each account title and its amount (from ledger) in the trial balance. If an account has a zero balance, list it with a zero in the normal balance column (or omit it entirely).Compute the total of debit balances and the total of credit balances.Verify (prove) total debit balances equal total credit balances.P 238After processing its remaining transactions for December, FastForward’s Trial Balance is prepared.The trial balance lists all account balances in the general ledger. If the books are in balance, the total debits will equal the total credits.P 239Searching for and Correcting ErrorsIf the trial balance does not balance, the error(s) must be found and corrected. Make sure the trial balance columns are correctly added. Make sure account balances are correctly entered from the ledger. See if debit or credit accounts are mistakenly placed on the trial balance. Re-compute each account balance in the ledger. Verify that each journal entry is posted correctly. Verify that each original journal entry has equal debits and credits.P 240NEED-TO-KNOWDebitCreditAPPLETrial BalanceSeptember 29, 20X2Prepare a trial balance for Apple using the following condensed data from its fiscal year-ended September 29, 20X2.Assets NormalLiabilities NormalOwner, Capital NormalOwner, Withdrawals NormalRevenues NormalExpenses NormalTotals Debits = CreditsOwner, Capital$79,263Accounts payable21,175Investments and other assets138,936Other liabilities37,178Land and equipment15,452Cost of sales (expense)101,876Selling and other expense12,899Cash10,746Accounts receivable10,930Revenues156,508Owner, Withdrawals$3,285P 241NEED-TO-KNOWOwner, Capital$79,263Accounts payable21,175Investments and other assets138,936Other liabilities37,178Land and equipment15,452Cost of sales (expense)101,876Selling and other expense12,899Cash10,746Accounts receivable10,930Revenues156,508Owner, Withdrawals$3,285DebitCreditCash$10,746Accounts receivable10,930Land and equipment15,452Investments and other assets138,936Accounts payable$21,175Other liabilities37,178Owner, Capital79,263Owner, Withdrawals3,285Revenues156,508Cost of sales (expense)101,876Selling and other expense12,899Totals$294,124$294,124APPLETrial BalanceSeptember 29, 20X2Prepare a trial balance for Apple using the following condensed data from its fiscal year-ended September 29, 20X2.P 242 02-P3: Using a Trial Balance to Prepare Financial Statements 43Using a Trial Balance to Prepare Financial StatementsP 344Financial StatementsThe four financial statements and their purposes are: Income statement — describes a company’s revenues and expenses along with the resulting net income or loss over a period of time due to earnings activities. Statement of owner’s equity— explains changes in equity from net income (or loss) and from any owner investments and withdrawals over a period of time. Balance sheet — describes a company’s financial position (types and amounts of assets, liabilities, and equity) at a point in time. Statement of Cash Flows — The statement of cash flows lists the cash inflows and cash outflows for the period.**For simplicity, we do not show the statement of cash flows for FastForward in this chapter, but we do return to this statement in the next chapter.**P345Income StatementP 346Statement of Owner’s EquityP 347Balance SheetP 348Presentation IssuesDollar signs are not used in journals and ledgers.Dollar signs appear in financial statements and other reports such as trial balances. The usual practice is to put dollar signs beside only the first and last numbers in a column.When amounts are entered in the journal, ledger, or trial balance, commas are optional to indicate thousands, millions, and so forth.Commas are always used in financial statements.Companies commonly round amounts in reports to the nearest dollar, or even to a higher level.P 349Global ViewBoth U.S. GAAP and IFRS prepare the same four basic financial statements. A few differences are found within each statement, but over time these differences are likely to be eliminated. Here is a typical IFRS balance sheet presentation.50Global ViewAccounting systems depend on control procedures that assure the proper principles were applied in processing accounting information. The passage of SOX legislation strengthened U.S. control procedures in recent years.The percentage of employees in information technology that report observing specific types of misconduct in 2009. 51 02-A2: Debt Ratio 52Debt RatioEvaluates the level of debt risk.A higher ratio indicates that there is a greater probability that a company will not be able to pay its debt in the future.A 2Total LiabilitiesTotal AssetsDebt Ratio = 53End of Chapter 254