Acct 230 1st Edition Lecture 6 Outline of Last Lecture II Accounting Information Decision Making a Careers in Accounting Outline of Current Lecture III The Accounting Information System a Measuring Business Activities Current Lecture II The Accounting Information System a Role of Financial Accounting i Measure business activities of the company ii Communicate those measurements to external parties for decision making purposes b Measuring Business Activities i Identify the basic steps in measuring external transactions 1 Most business enterprises use a computerized accounting system due to the sheer volume of data they must process 2 Computerized data processing is fast accurate and affordable 3 Knowledge of manual accounting information system will provide an essential understanding of the basic model that underlies the computerized programs ii Classification of Business activities 1 External Transactions a Use source documents to identify accounts affected by an external transaction b Analyze the impact of the transaction on the accounting equation i Each transaction will have a dual effect If an economic event increases one side of the equation it will also increase the other side of the equation by the same amount ii Ask yourself the following 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 1 What is the one account in the accounting equation affected by the transaction Does that account increase or decrease 2 What is the second account affected by the transaction Did it increase or decrease 3 Do assets still equal liabilities stockholder s equity c Assess whether the transaction results in a debit or credit to the account balance d Record the transaction e Post the transaction to the T Account in the general ledger f Prepare a trial balance 2 Internal transactions do not involve an external entity iii
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