Getting to Know the Accounting System

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Getting to Know the Accounting System


Lecture number:
2
Pages:
2
Type:
Lecture Note
School:
Miami University, Oxford
Course:
Acc 221 - Intro to Financial Accounting
Edition:
1
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Unformatted text preview:

Lecture 2 Outline of Previous Lecture  Chapter 1:  Assets, Liabilities, and owner’s equity  Accounting Formula, Additional Facts o Assets = Liability + Owner’s Equity o Additional Facts About Accounting Cycle Outline of Current Lecture  Chapter 2: Getting to know the Accounting System  Accounting System o Accounting system reporting o Staying in balance o Common Stock o General Journal Current Lecture  Chapter 2: Getting to know the Accounting System  Accounting System o Accounting system reporting 1. General Journal – Post individual transactions with descriptions 2. General Ledger – Post individual transactions to accounts 3. Trial Balance – Compares all debits with all credits  Used to make sure debits and credits are balanced  Internally used to make sure in balance – public never sees this report 4. Balance Sheet – Point in time o Staying in balance  Accounting Balance – Assets = Liabilities + Owner’s Equity  Debits and credits must stay in balance  Even if system is in balance, it may still be wrong  Enter the wrong number  Entry is in the wrong time  Forget an entry  Put entry in wrong claims accounts  Make entries backwards (Dr. where should Cr., Cr. Where should Dr.)  Normal Balance of Account – always the side that increases the account  Beginning balance always goes here  Assets side: normal balance of account on lef  Liabilities and owner’s equity sides: normal balance of account on right o Common Stock ACC 221 1st Edition



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