Вы находитесь на странице: 1из 36

Copyright ©2011 Pearson Education South East Asia 1

Copyright ©2011 Pearson Education South East Asia 2


Transaction Analysis
Chapter 2

Copyright ©2011 Pearson Education South East Asia 3


Transactions
• Events that have a financial impact on the
business and can be measured reliably
▫ Selling products
▫ Paying expenses
• Have two sides:
▫ Giving
▫ Receiving
• Accounting records both sides of transactions

Copyright ©2011 Pearson Education South East Asia 4


The Account

Assets Liabilities Shareholders’


Equity

• Account is a record of all the changes in a


particular asset, liability and shareholders’
equity element
▫ Basic summary device of accounting

Copyright ©2011 Pearson Education South East Asia 5


Assets
Accounts &
Cash Notes Inventory
Receivable

Prepaid
Land Buildings
Expenses

Equipment,
Furniture &
Fixtures
Copyright
Copyright ©2011
©2011 Pearson
Pearson Education
Education South
South East
East Asia
Asia 6
Liabilities

Accounts Notes Accrued


payable payable liabilities

Copyright
Copyright ©2011
©2011 Pearson
Pearson Education
Education South
South East
East Asia
Asia 7
Shareholders’ Equity

Share Retained
Dividends
Capital Earnings

Revenues Expenses

Copyright ©2011 Pearson Education South East Asia 8


Learning Objective 1
Analyze transactions

Copyright ©2011 Pearson Education South East Asia 9


ShineBrite Car Wash, Inc
Shareholders'
Assets Liabilities Equity Type of
Accounts Accounts Share Retained Equity
Txn Cash receivable Supplies Land = payable + Capital Earnings Transaction
1 50,000 50,000 issued share capital
2 -40000 40,000
10,000 40,000 50,000
3 3,700 3,700
10,000 3,700 40,000 3,700 50,000
4 7,000 7,000 revenue
17,000 - 3,700 40,000 3,700 50,000 7,000
5 3,000 3,000 revenue
17,000 3,000 3,700 40,000 3,700 50,000 10,000
6 -1100 -1100 expense
-1200 -1200 expense
-400 -400 expense
14,300 3,000 3,700 40,000 3,700 50,000 7,300

Copyright ©2011 Pearson Education South East Asia 10


ShineBrite Car Wash, Inc
Shareholders'
Assets Liabilities Equity Type of
Accounts Accounts Share Retained Equity
Txn Cash receivable Supplies Land = payable + Capital Earnings Transaction
14,300 3,000 3,700 40,000 3,700 50,000 7,300
7 -1900 40,000 -1900
12,400 3,000 3,700 80,000 1,800 50,000 7,300
8 not a transaction by the company
12,400 3,000 3,700 80,000 1,800 50,000 7,300
9 1,000 -1000
13,400 2,000 3,700 80,000 1,800 50,000 7,300
10 22,000 -22000
35,400 2,000 3,700 58,000 1,800 50,000 7,300
11 -2100 -2100 Dividends
33,300 2,000 3,700 58,000 1,800 50,000 5,200

$57,000 $57,000
Copyright ©2011 Pearson Education South East Asia 11
ShineBrite Car Wash, Inc
Shareholders'
Assets Liabilities Equity Type of
Accounts Accounts Share Retained Equity

Statement of Changes in Equity Data


Txn Cash receivable Supplies Land = payable + Capital Earnings Transaction
1 50,000 50,000 issued share capital
Statement of Cash Flows Data

Income Statement Data


2 -40000 40,000
3 3,700 3,700
4 7,000 7,000 revenue
5 3,000 3,000 revenue
6 -1100 -1100 expense
-1200 -1200 expense
-400 -400 expense
7 -1900 -1900
9 1000
10 22000
5 -2100 (2,100) Dividends
Bal 33,300 3,000 3,700 40,000 1,800 50,000 5,200
$57,000
Balance Sheet Data
Copyright ©2011 Pearson Education South East Asia 12
Learning Objective Two
Understand how accounting works

Copyright ©2011 Pearson Education South East Asia 13


Double-Entry Accounting
• Business transactions include two parts
▫ Giving
▫ Receiving
• Accounting based on a double-entry system
▫ Each transaction affects at least two accounts

Copyright ©2011 Pearson Education South East Asia 14


T-Account

Account Title
Left side Right side

Debit Credit

Copyright ©2011 Pearson Education South East Asia 15


Rules of Debit and Credit
Shareholders’
Assets Liabilities Equity

Debit Credit Debit Credit Debit Credit

Copyright ©2011 Pearson Education South East Asia 16


Additional Shareholders’ Equity
Accounts: Revenues & Expenses

Liabilities
Share Capital
Assets +
Beginning Retained Earnings
Shareholders’ +
Revenues
Equity
Expenses

Dividends

Copyright ©2011 Pearson Education South East Asia 17


Rules of Debit and Credit
Shareholders’ Equity
Assets Liabilities Share Capital Retained earnings

Debit Credit Debit Credit Debit Credit Debit Credit


- - - Dividends
-

Debit Credit
Revenue
- Expenses

Debit Credit Debit Credit


- -
Copyright ©2011 Pearson Education South East Asia 18
Learning Objective Three
Record transactions in the journal

Copyright ©2011 Pearson Education South East Asia 19


The Journal
• Chronological record of transactions
• Three steps
▫ Specify each account affected by the transaction
and classify by type
▫ Determine if each account is increased or
decreased
 Use debit credit rules
▫ Record in journal

Copyright ©2011 Pearson Education South East Asia 20


Journal Entry

JOURNAL
Date Accounts and explanation Debit Credit
May 1 Cash 50,000
Share Capital 50,000
Issued ordinary shares

Copyright ©2011 Pearson Education South East Asia 21


The Ledger
Cash

Ledger
Individual
asset Share
accounts Capital

Individual
equity
accounts
Accounts
payable Individual
liability
accounts

22
Copyright ©2011 Pearson Education South East Asia
Posting
JOURNAL
Date Accounts and explanation Debit Credit
May 1 Cash 50,000
Share Capital 50,000
Issued ordinary shares

Cash Share Capital


$50,000 $50,000

Copyright ©2011 Pearson Education South East Asia 23


Flow of Accounting Data
Transaction occurs

Transaction analyzed

Transaction journalized

Amounts posted to the ledger

Copyright
Copyright ©2011
©2011 Pearson
Pearson Education
Education South
South East
East Asia
Asia 24
Learning Objective Four
Construct a trial balance

Copyright ©2011 Pearson Education South East Asia 25


Trial Balance
• Lists all accounts with their balances
• Assets listed first, then liabilities and
shareholders’ equity
• Shows that debits equal credits
• Usually prepared at the end of the period

Copyright ©2011 Pearson Education South East Asia 26


Analyzing Accounts
Cash
Beginning balance
Cash receipts Cash payments ?
Ending balance

Copyright ©2011 Pearson Education South East Asia 27


Analyzing Accounts
Accounts receivable
Beginning balance
Sales on account
Collections on account ?
Ending balance

Copyright ©2011 Pearson Education South East Asia 28


Analyzing Accounts
Accounts payable
Beginning balance

Payments on account ? Purchases on account

Ending balance

Copyright ©2011 Pearson Education South East Asia 29


Correcting Accounting Errors

Missing • Trace each account from journal to


account ledger

Divide out-of- • Reversing debits and credits doubles


balance the error
amount by 2
Divide out-of- • If even, error may be a
balance • Slide or
amount by 9 • Transposition

Copyright ©2011 Pearson Education South East Asia 30


Chart of Accounts
Balance Sheet Accounts

Assets Liabilities Shareholders’ Equity

101 Cash 201 Accts. payable 301 Share capital

111 Accts. receivable 231 Notes payable 311 Dividends

141 Office supplies 312 Retained earnings

151 Office furniture Income Statement Accounts

191 Land Revenues Expenses

401 Service revenue 501 Rent expense

502 Salary expense

503 Utilities expense

Copyright ©2011 Pearson Education South East Asia 31


Normal Balances of Accounts
Assets Debit
Liabilities Credit
Shareholders’ Equity overall Credit
Share capital Credit
Retained earnings Credit
Dividends Debit
Revenues Credit
Expenses Debit

Copyright ©2011 Pearson Education South East Asia 32


Learning Objective 5
Analyze transactions using only T-Accounts

Copyright ©2011 Pearson Education South East Asia 33


Using T-Accounts
• Decisions often are made without a complete
accounting system
• T-Accounts allow managers to analyze
transactions quickly

Copyright ©2011 Pearson Education South East Asia 34


Short Exercise 2-13
Cash Computer Equipment
$140,000 $100,000

Accounts Payable Share Capital


$100,000 $140,000

Debits = $240,000 Credits = $240,000

Copyright ©2011 Pearson Education South East Asia 35


End of Chapter Two

Copyright ©2011 Pearson Education South East Asia 36