1 / 13

3- 1

CHAPTER 3. PROCESSING BUSINESS TRANSACTIONS. 3- 1. Outline. Accounting as an Information System Business Transactions The Accounting Cycle Rules of Debit and Credit The Journal Transactional Analysis The General Journal: Illustration. 3- 2. Accounting as an Information System.

kura
Download Presentation

3- 1

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. CHAPTER 3 PROCESSING BUSINESS TRANSACTIONS 3-1

  2. Outline • Accounting as an Information System • Business Transactions • The Accounting Cycle • Rules of Debit and Credit • The Journal • Transactional Analysis • The General Journal: Illustration 3-2

  3. Accounting as an Information System INPUT ---- PROCESS ---- OUTPUT SOURCE ACCOUNTING INFORMATION DOCUMENTS CYCLETO MANAGEMENT Business TransactionsFinancial Statements 3-3

  4. Business Transactions • Raw Material of the accounting process • Like crude oil or food supplies, transactions must be processed in order to get the end product 3-4

  5. The Accounting Cycle The accounting cycle: first 3 steps • Identification of Business Transactions • Journalizing-recording the business transactions in chronological order in a General Journal • Posting to the General Ledger 3-5

  6. Identifying Business Transactions: Step 1 • Identification of Business Transactions • Values Received=Values Given • Debits = Credits (Dr = Cr) 3-6

  7. Rules of Debits and Credits 3-7

  8. Journalizing: Step 2 Once we recognize that a transaction has occurred, We record it in the “book of original entry”, usually known as THE GENERAL JOURNAL 3-8

  9. The Journal • A book of original entry • Transactions are recorded in chronological order • Used to complete Step 2 of the Accounting Cycle 3-9

  10. The General Journal Date Account Names Ref Dr Cr 3-10

  11. Recording Transactions in the General Journal – Step 2 of the Accounting Cycle • Mr. Carlton invests $30,000 in a new travel agency • The business borrows $50,000 at 8% per annum. • First month rent is paid, $1,000. 3-11

  12. Transactional Analysis 1. Value Received by the Travel Agency is $30,000 in Cash- Debit Cash; Value Given by the Travel Agency is ownership interest in the amount of $30,000- Credit M. Carlton, Capital 2. Value Received is $50,000 in Cash- Debit Cash; Value given is the promise to pay $50,000 in the future- Credit notes payable 3. Value Received is the use of the premises rented worth $1,000- Debit Rent Expense; ValueGiven is a payment of $1,000 in Cash- Credit Cash See journal entries in the next slide 3-12

  13. The General Journal: Illustration Date Account Names Ref Dr. Cr. Sep. 1 Cash 30,000- M.Carlton, Capital 30,000- Owner’s investment Sep. 2 Cash 50,000- Notes Payable 50,000- Company borrows money at 12% per annum Sep. 3 Rent Expense 1,000- Cash 1,000- Rent is paid 3-13

More Related