New version page

MU ACC 221 - Basic Transactions in Accounting System

Documents in this Course
Load more

This preview shows page 1 out of 3 pages.

View Full Document
View Full Document

End of preview. Want to read all 3 pages?

Upload your study docs or become a GradeBuddy member to access this document.

View Full Document
Unformatted text preview:

ACC 221 1st Edition Lecture 4Outline of Previous Lecture- Chapters 1 & 2: Additional Facts About Accounting System Accounting Systemo Traditional accounting system routineo Asset, Liability, Owner’s Equity Accounts Additional Factso Entries don’t have to affect different sides to stay in balanceo No set accounting periodsOutline of Current Lecture - Chapter 3 Accounting Systemo Shareholderso Accounting Periods Differences in Assetso Inventory v. Equipment Basic TransactionsCurrent Lecture- Chapter3 Accounting Systemo Shareholders Claims to Assets (Gaining money) is done through selling shares of stock General Ledger Trial Balance Balance Sheeto Accounting Periods Must know accounting period, so you know when to complete financial statement New accounting period: transfer ending balances to beginning balances for new period Differences in assetso Inventory V. Equipment Inventory – what you are selling to customers Equipment – what companies use within the businessThese 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. Basic transactionso Sale of inventory to a customer (2 parts):- Sale: selling product to customer in exchange for casho Debit asset cash (Adding money from sale to your cash)o Credit retained earnings (Adding money from sale to your total earnings)- Transaction: giving the product to the customero Debit retained earnings (Price you paid for the car)o Credit inventory (Taking price you paid for car out of inventory)o Paying Rent- Debit retained earnings (Subtract from total earnings)- Credit Cash (Subtract from total cash)o Paying Wages- Debit Retained Earnings - Credit casho Making a sale on credit – affects accounts receivable- Do not count this as a liability, even though you have not actually been paid in cash for the inventory. This is because cash is coming, and must keep transaction within the accounting period. - Sale:o Debit accounts receivableo Credit retained earnings- Transaction: o Debit retained earningso Credit inventoryo Collect cash from accounts receivable- Debit Cash- Credit Accounts Reviewableo Pay interest to bank- Owe Money to banko Even if don’t pay until following month, still write down into account.o Accrual Accounting– record everything that should occur to the company within the accounting period, regardless of when it is actuallypaid. - Increases claims to assets for bank (non-owners, so liability)- Total assets do not changeo Account summary- Summary of the increase in owner’s claim to assets- Given to stockholders so they are able to readily see where the net gain or lossis coming from in an accounting periodo Sale of inventory, minus: The cost of inventory Rent Wages Bank’s claim to


View Full Document
Loading Unlocking...
Login

Join to view Basic Transactions in Accounting System and access 3M+ class-specific study document.

or
We will never post anything without your permission.
Don't have an account?
Sign Up

Join to view Basic Transactions in Accounting System and access 3M+ class-specific study document.

or

By creating an account you agree to our Privacy Policy and Terms Of Use

Already a member?