会计学基础英文课件 (3)

Lesson 3 Analyzing and Recording Transactions
Task team of Fundamental Accounting
School of Business, Sun Yat-sen University
Outline
• • • • • • • Accounts Detailed Description of Various Accounts T-Accounts Rules of Debits and Credits Double-entry Accounting Illustrated Application of Rules
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Rules of Debit and Credit
Air & Sea purchased land for $40,000 cash.
Assets
=
Liabilities
Stockholders’ + Equity
Common Stock Bal. 50,000
Cash Bal. 50,000 Credit for Decrease, 40,000 Land Debit for Increase, 40,000
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The Assets Account
Assets are the economic resources that benefit the business now and in the future Cash Accounts receivable Inventory Notes receivable Prepaid expenses Supplies Properties Buildings Equipment
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Details of Equity Account
Common Stock
Retained Earnings
Dividends
Revenues
Expenses
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The T-Account
Account Title Debit
Credit
LEFT SIDE
RIGHT SIDE
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Increases and Decreases in the Accounts
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Ledger
• A group of accounts. • All the accounts of a business grouped together form a book called the ledger (or general ledger).
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Posting
• The process of copying (transferring) data from the journal to accounts in the ledger.
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Transactions, Accounts and Rules of Debits & Credits
1. Owners’ investment of cash increases both assets and stockholders’ equity. 2. Purchase of an asset for cash increases assets and decreases assets (no effect on total assets). 3. Purchase of an asset on credit (on account) increases both assets and liabilities. 4. Receipt of cash for service revenue increases both assets and stockholders’ equity. 5. Performance of services on account increases both assets and stockholders’ equity. 6. Cash payment of expenses decreases both assets and stockholders’ equity.
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Opening Story
• Do you have any idea about how your parents keep an “account” of how much the family spends?
• What a good family accountant!
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Opening Story
• A global demand for accountants – where can the “Big Four” find accountants with talent and virtues?
– nd, E&Y British president (indirect quote) In the recent 18 months, the shortage of accounting talents has been scarcely satisfied. The most valuable in the 21st century is accountants to special accounting firms like us. （2005－7－21）
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A journal entry
• A journal entry would appear as follows:
Account Name XX (debit amount) Account Name XX (credit amount) Brief explanation of the transaction.
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The Liabilities Account
Liabilities are the debts of the company. Notes payable Accounts payable Accrued liabilities (for expenses incurred but not paid) Long-term liabilities (bonds)
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An Practical Illustration
• Do you still remember the example of Beauty Photo Store? We are using it again here! • Remember always: The accounting equation must remain in balance after each transaction has been recorded.
Accounting Equation: Assets = Liabilities Stockholders’ + Equity
Rules of Debit and Credit:
Debit Credit + –
Debit Credit – +
Debit Credit – +
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Rules of Debit and Credit
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Transactions, Accounts and Rules of Debits & Credits (cont)
7. Payment on account decreases both assets and liabilities. 8. Personal transactions of the owner do not affect the business, per the entity concept. 9. Collection of cash on account increases assets and decreases assets. 10. Sale of an asset at a price equal to its cost increases assets and decreases assets. 11. Declaration and payment of cash dividends decreases both assets and stockholders’ equity.
– Debits in the journal are posted as debits to the appropriate accounts; credits in the journal are posted as credits to the appropriate accounts. – All transactions must be keyed by date or number to provide a link between the journal and the ledger. – Ledger accounts appear after a series of transactions have been posted and account balances calculated.
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The Equity Account
Stockholders’ (owners’) equity is the owners’ claims to the assets of a corporation. A proprietorship uses a single account. A partnership uses separate accounts for each owner’s capital balance and withdrawals. A corporation uses separate capital accounts for each source of capital.
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Expansion of the Accounting Equation