Introduction to Financial Accounting03

3ProcessingAccountingInformationIntroductiontoFinancialAccountingInformation,7/eCurtisL.NortonandGaryA.PorterPowerPointAuthor:CatherineLumbattis©2011CengageLearning.AllRightsReserved.ThiseditionisintendedforuseoutsideoftheU.S.only,withcontentthatmaybedifferentfromtheU.S.Edition.Maynotbescanned,copied,duplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.ExternalandInternalEventsExternalevents:interactionbetweenentityandoutsideenvironmentLO1Internalevents:Interactionwithinentity©2011CengageLearning.AllRightsReserved.ThiseditionisintendedforuseoutsideoftheU.S.only,withcontentthatmaybedifferentfromtheU.S.Edition.Maynotbescanned,copied,duplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.SourceDocumentsEvidenceneededinanaccountingsystemtorecordtransactionsPurchaseInvoiceCashRegisterTapeSalesInvoiceReceivingDocumentPayrollRecordsShippingDocumentChecksLO2©2011CengageLearning.AllRightsReserved.ThiseditionisintendedforuseoutsideoftheU.S.only,withcontentthatmaybedifferentfromtheU.S.Edition.Maynotbescanned,copied,duplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.Assets=Liabilities+Owners’EquityCashCapitalStock+$100,000=+$100,000TheaccountingequationmustalwaysremaininbalanceIssueCapitalStockforCashLO31/10TransactionsforGlengarryHealthClub©2011CengageLearning.AllRightsReserved.ThiseditionisintendedforuseoutsideoftheU.S.only,withcontentthatmaybedifferentfromtheU.S.Edition.Maynotbescanned,copied,duplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.PurchaseofPropertyinExchangeforNotePayableIncreaseonlefthascorrespondingincreaseonrightAssets=Liabilities+Owners’EquityLandNotePayable+$50,000=+$200,000Building+$150,000©2011CengageLearning.AllRightsReserved.ThiseditionisintendedforuseoutsideoftheU.S.only,withcontentthatmaybedifferentfromtheU.S.Edition.Maynotbescanned,copied,duplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.Assets=Liabilities+Owners’EquityEquip.Accts.Pay.+$20,000=+$20,000PurchaseofEquipmentonAccountAtleasttwoaccountsaffectedbyeverytransaction©2011CengageLearning.AllRightsReserved.ThiseditionisintendedforuseoutsideoftheU.S.only,withcontentthatmaybedifferentfromtheU.S.Edition.Maynotbescanned,copied,duplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.Revenue–Expenses=NetIncome(Loss)IncomeStatementStatementofRetainedEarningsBeg.R/E+NetIncome(or–NetLoss)–Dividends=End.R/EEffectofRevenueandExpensesonRetainedEarnings©2011CengageLearning.AllRightsReserved.ThiseditionisintendedforuseoutsideoftheU.S.only,withcontentthatmaybedifferentfromtheU.S.Edition.Maynotbescanned,copied,duplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.SellMonthlyMembershipsonAccountAssets=Liabilities+Owners’EquityAccts.Rec.RetainedEarnings+$15,000=+$15,000Revenuesincreaseretainedearnings©2011CengageLearning.AllRightsReserved.ThiseditionisintendedforuseoutsideoftheU.S.only,withcontentthatmaybedifferentfromtheU.S.Edition.Maynotbescanned,copied,duplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.SellCourtTimeforCashAssets=Liabilities+Owners’EquityCashRetainedEarnings+$5,000=+$5,000Revenuesincreaseretainedearnings©2011CengageLearning.AllRightsReserved.ThiseditionisintendedforuseoutsideoftheU.S.only,withcontentthatmaybedifferentfromtheU.S.Edition.Maynotbescanned,copied,duplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.Assets=Liabilities+Owners’EquityCashRetainedEarnings–$10,000=–$10,000ExpensesdecreaseretainedearningsPaymentofWagesandSalaries©2011CengageLearning.AllRightsReserved.ThiseditionisintendedforuseoutsideoftheU.S.only,withcontentthatmaybedifferentfromtheU.S.Edition.Maynotbescanned,copied,duplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.Assets=Liabilities+Owners’EquityCashRetainedEarnings–$3,000=–$3,000PaymentofUtilitiesExpensesalsodecreaseassetsorincreaseliabilities©2011CengageLearning.AllRightsReserved.ThiseditionisintendedforuseoutsideoftheU.S.only,withcontentthatmaybedifferentfromtheU.S.Edition.Maynotbescanned,copied,duplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.CollectionofAccountsReceivableAssets=Liabilities+Owners’EquityCash+$4,000=(nochangeinLiab.orR/E)Accts.Rec.–$4,000Assetsweretraded:accountsreceivableforcash©2011CengageLearning.AllRightsReserved.ThiseditionisintendedforuseoutsideoftheU.S.only,withcontentthatmaybedifferentfromtheU.S.Edition.Maynotbescanned,copied,duplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.Assets=Liabilities+Owners’EquityCashRetainedEarnings–$2,000=–$2,000PaymentofDividendsDividendsdirectlyreduceretainedearnings©2011CengageLearning.AllRightsReserved.ThiseditionisintendedforuseoutsideoftheU.S.only,withcontentthatmaybedifferentfromtheU.S.Edition.Maynotbescanned,copied,duplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.Assets=Liabilities+O/ESoldstock+$100,000=+$100,000Boughtprop.withnote+200,000=+$200,000Boughtequip.onacct.+20,000=+20,000Soldmemberships+15,000=+15,000Soldcourttime+5,000=+5,000Paidwages–10,000=–10,000Paidutilities–3,000=–3,000Collec