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BSAD 221 Introductory Financial Accounting Donna Gunn, CA

BSAD 221 Introductory Financial Accounting Donna Gunn, CA. International Exchange. Argentina Australia Barbados Czech Republic Denmark Finland France Germany Isreal Mexico Peru Poland Turkey United Kingdom United States. http:// sites.stfx.ca/international_exchange /

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BSAD 221 Introductory Financial Accounting Donna Gunn, CA

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  1. BSAD 221Introductory Financial AccountingDonna Gunn, CA
  2. International Exchange Argentina Australia Barbados Czech Republic Denmark Finland France Germany Isreal Mexico Peru Poland Turkey United Kingdom United States http://sites.stfx.ca/international_exchange/ Contact Brenda Riley: briley@stfx.ca
  3. Trial Balance AccountDebit Credit Listing of all accounts and their balances at a given point in time Cash 80,000 Accounts Receivable 72,000 Advertising Supplies 25,000 Prepaid Insurance 6,000 Office Equipment 50,000 Notes Payable 50,000 Accounts Payable 25,000 Unearned Service Revenue 12,000 Common Shares 80,000 Retained Earnings 20,000 Service Revenue 100,000 Salaries Expense 45,000 Rent Expense 9,000 TOTALS287,000 287,000
  4. Transaction A transaction is any event that has financial impact on the business Can be measured Provides objective information Must be able to assign $ amount to transaction
  5. Recording Transactions Every transaction affects at least two accounts (duality of effects). The accounting equation must remain in balance after each transaction. A=L+ SE What the company owns What the company owes What the owners have invested
  6. Assets are economic resources that benefit the business now and in the future Cash Accounts receivable Inventory Notes receivable Prepaid expenses Land Buildings Equipment, furniture, and fixtures The Account 2 -
  7. Bank loan Notes payable Accounts payable Accrued liabilities (for expenses incurred but not paid) Long-term liabilities (bonds and mortgages) Liabilities are the debts of the company. The Account 2 -
  8. Shareholders’ (owners’) equity is the owners’ investment in a corporation. The Account Contributed Capital Retained Earnings - impacted by Revenues and Expenses Dividends 2 -
  9. Recording Transactions Accounts and effects Identify the accounts affected and classify them by type of account (A, L, SE). Determine the direction of the effect (increase or decrease) on each account. Balancing Verify that the accounting equation (A=L+SE) remains in balance.
  10. ASSETS LIABILITIES EQUITIES Debit for Increase Credit for Decrease Debit for Decrease Credit for Increase Debit for Decrease Credit for Increase The Debit-Credit Framework Debits and credits affect the Balance Sheet Model as follows: A= L+ SE
  11. Trial Balance AccountDebit Credit Listing of all accounts and their balances at a given point in time Cash 80,000 Accounts Receivable 72,000 Advertising Supplies 25,000 Prepaid Insurance 6,000 Office Equipment 50,000 Notes Payable 50,000 Accounts Payable 25,000 Unearned Service Revenue 12,000 Common Shares 80,000 Retained Earnings 20,000 Service Revenue 100,000 Salaries Expense 45,000 Rent Expense 9,000 TOTALS287,000 287,000
  12. How Do Companies Keep Track of Account Balances? A T-account is a tool used to represent an account. Account Name Left Right
  13. T-accounts How Do Companies Keep Track of Account Balances? Journal entries
  14. How Do Companies Keep Track of Account Balances? The right side of the T-account is alsthe credit side. The right side of the T-account is always the credit side. The left side of the T-account is always the debit side. Account Name Left Right Debit Credit
  15. T-Accounts and the Trial Balance AccountDebit Credit Cash Cash 80,000 Accounts Receivable 72,000 Advertising Supplies 25,000 Prepaid Insurance 6,000 Office Equipment 50,000 Notes Payable 50,000 Accounts Payable 25,000 Unearned Service Revenue 12,000 Common Shares 100,000 Dividends 5,000 Service Revenue 100,000 Salaries Expense 40,000 Rent Expense 9,000 TOTALS287,000 287,000 80,000 Notes Payable 50,000 Dividends 5,000 Revenue 100,000
  16. Journal Entry Company X provides $1,000 of services and is paid in cash. Cash is received so cash will be increased. As cash is an asset the increase is shown as a debit. Revenue is earned, so revenue will be increased. Revenues are an increase to equity, therefore the increase is shown as a credit. Dr. Cash $1,000 Cr. Revenue $1,000 To record service revenue of $1,000
  17. T-Accounts and the Trial Balance AccountDebit Credit Cash Cash 81,000 Accounts Receivable 72,000 Advertising Supplies 25,000 Prepaid Insurance 6,000 Office Equipment 50,000 Notes Payable 50,000 Accounts Payable 25,000 Unearned Service Revenue 12,000 Common Shares 100,000 Dividends 5,000 Service Revenue 101,000 Salaries Expense 40,000 Rent Expense 9,000 TOTALS288,000 288,000 80,000 1,000 81,000 Revenue 100,000 1,000 101,000
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