ACC 221 1st Edition 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 These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute 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 Common stock used with corporations Owner s claim to assets Used with corporations Get shares of stock that shows ownership not individuals who have direct access to money Common stock account replaces cash account on owner s equity side o General Journal List form feature date what accounts debit what accounts credit and details of transaction List debits first credits second credits indented on list Generally work on a monthly basis Post directly to general ledger
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