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Charpter four Accounting methods

Charpter four Accounting methods. Debit side Credit side Luca Paciolio: Italian mathematician and Franciscan friar the father of accounting Summa de arithmetica, geometria, proportioni et proportionalita. 4.1 The Double-Entry System of Accounting. Double-entry accounting Debit

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Charpter four Accounting methods

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  1. Charpter four Accounting methods

  2. Debit side Credit side Luca Paciolio: Italianmathematician and Franciscan friar the father of accounting Summa de arithmetica, geometria, proportioni et proportionalita 4.1 The Double-Entry System of Accounting

  3. Double-entry accounting Debit Credit balance New words and terms 4.1

  4. The T- Accounts Four-Column Account Format Normal balance of an account The chart of accounts 4.2 The Account

  5. The T-account Title Dr Cr Notes: The increase and decrease should be recorded seperatly on debit side or credit side of every accounts

  6. Four-column account format

  7. Increases Decreases Account classification T-account entry running balance post JR=Journal Reference New words and terms 4.2

  8. debit-balance accounts credit-balnace accounts permanent accounts temporary accounts overdraw overpay miscellaneous expense New words and terms 4.2

  9. The symbol of debit and credit Debit side: Dr Credit side: Cr The rules of debit and credit 4.3 Debits and Credits

  10. Liabilities Owner’s equity Assets Beginning balances Beginning balances XXX XXX increase XXX decrease XXX XXX XXX decrease increase Ending balances Ending balances XXX XXX

  11. Summary

  12. use of assets, liabilities and owner’s equity use of revenues, expenses and net income 4.4 Applying for Double-Entry Accounting

  13. Assets = liabilities + Owner’s Equity cash Ted Andy, Capital +30000 +30000 Transaction (1) : owner invested $ 30 000 cash in the business

  14. Transaction (2) :purchased office equipment on account, $ 2 500 Assets = Liabilites + Owner’s Equity Cash+ office = Accounts + Ted Andy, Capital equipment payables +2 500 = +2 500

  15. Transaction (3) :purchased office supplies for cash, $ 350 Assets = Liabilites + Owner’s Equity Cash+ office + office = Accounts + Ted Andy, Capital supplies equipment payables -350 +350

  16. Transaction (4) :paid amount owed to a creditor, $ 500 Assets = Liabilites + Owner’s Equity Cash+ office + office = Accounts + Ted Andy, Capital supplies equipment payables -500 -500

  17. Transaction (5) :purchased office supplies on account, $ 400 Assets = Liabilites + Owner’s Equity Cash+ office + office = Accounts + Ted Andy, Capital supplies equipment payables +400 = +400

  18. Transaction (6) :owner withdrew $ 300 for personal use Assets = Liabilites + Owner’s Equity Cash+office+office = Accounts + Ted’s– Ted ‘s+revenues-Expense supplies equipment payables Capital Drawing -300 = +300

  19. Transaction (7) :received cash as payment for professional fees, $ 3 500 Assets = Liabilites + Owner’s Equity Cash+office+office = Accounts + Ted’s– Ted ‘s+revenues-Expense supplies equipment payables Capital Drawing +3500 = +3500

  20. Transaction (8) :paid office rent $ 1 000 Assets = Liabilites + Owner’s Equity Cash+office+office = Accounts + Ted’s– Ted ‘s+revenues-Expense supplies equipment payables Capital Drawing -1000 = +1000

  21. Transaction (9) : paid telephone expense, $ 75 Assets = Liabilites + Owner’s Equity Cash+office+office = Accounts + Ted’s– Ted ‘s+revenues-Expense supplies equipment payables Capital Drawing - 75 = +75

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