Professional Documents
Culture Documents
2-1
Chapter 2
The Recording
Process
Financial Accounting, IFRS Edition
Weygandt Kimmel Kieso
Slide
2-2
Study
Study Objectives
Objectives
1. Explain what an account is and how it helps in the recording
process.
2. Define debits and credits and explain their use in recording
business transactions.
3. Identify the basic steps in the recording process.
4. Explain what a journal is and how it helps in the recording
process.
5. Explain what a ledger is and how it helps in the recording
process.
6. Explain what posting is and how it helps in the recording
process.
7. Prepare a trial balance and explain its purposes.
Slide
2-3
The
The Recording
Recording Process
Process
Slide
2-4
The
The Account
Account
Record of increases and decreases in
Account a specific asset, liability, equity,
revenue, or expense item.
Debit = Left
Credit = Right
T-Account form.
Slide
2-5 SO 1 Explain what an account is and how it helps in the recording process.
The
The Account
Account
Account Name
Debit / Dr. Credit / Cr.
Balance $15,000
Account Name
Debit / Dr. Credit / Cr.
Balance $1,000
Assets Chapter
3-24
Normal Balance
Chapter
Expense
3-23
Revenue
Debit / Dr. Credit / Cr.
Debit / Dr. Credit / Cr.
Normal Balance
Normal Balance
Chapter
3-27 Chapter
3-26
Slide
2-9 SO 2
Debits
Debits and
and Credits
Credits Summary
Summary
Balance Sheet Income Statement
Asset = Liability + Equity Revenue - Expense
Debit
Credit
Review Question
Debits:
a. increase both assets and liabilities.
b. decrease both assets and liabilities.
c. increase assets and decrease liabilities.
d. decrease assets and increase liabilities.
Slide
Solution SO 2 Define debits and credits and explain their use
notes page in recording business transactions.
2-11
Assets
Assets and
and Liabilities
Liabilities
Assets
Debit / Dr. Credit / Cr.
Assets - Debits should
exceed credits.
Normal Balance
Chapter
3-23
Liabilities Credits
should exceed debits.
Liabilities
Debit / Dr. Credit / Cr.
The normal balance is on
the increase side.
Normal Balance
Chapter
3-24
Chapter
3-26
on revenue accounts is the same
as their effect on equity.
Expense
Debit / Dr. Credit / Cr. Expenses have the opposite
effect: expenses decrease equity.
Normal Balance
Chapter
3-27
Illustration 2-12
Review Question
Accounts that normally have debit balances are:
a. assets, expenses, and revenues.
b. assets, expenses, and retained earnings.
c. assets, liabilities, and dividends.
d. assets, dividends, and expenses.
Slide
Solution SO 2 Define debits and credits and explain their use
notes page in recording business transactions.
2-16
Summary
Summary of
of Debit/Credit
Debit/Credit Rules
Rules
Kathy Renee Browne, president of Hair It Is
Company has just rented space in a shopping
mall in which she will open and operate a beauty salon. A friend
has advised Kathy to set up a double-entry set of accounting
records in which to record all of her business transactions.
Following are the accounts that Hair It Is Company, will likely
need to record the transactions. Indicate whether the normal
balance of each account is a debit or a credit.
Slide
Solution on SO 2 Define debits and credits and explain their use
notes page in recording business transactions.
2-17
Steps
Steps in
in the
the Recording
Recording Process
Process
Illustration 2-13
Slide
2-18 SO 3 Identify the basic steps in the recording process.
Steps
Steps in
in the
the Recording
Recording Process
Process
Journalizing
Book of original entry.
Slide
2-19 SO 4 Explain what a journal is and how it helps in the recording process.
Steps
Steps in
in the
the Recording
Recording Process
Process
Journalizing - Entering transaction data in the journal.
Illustration: On September 1, stockholders invested $15,000
cash in exchange for ordinary shares, and Softbyte
purchased computer equipment for $7,000 cash.
Illustration 2-14
General Journal
General Journal
Slide Solution on
2-21 notes page
SO 4
Steps
Steps in
in the
the Recording
Recording Process
Process
The Ledger
General Ledger
All accounts maintained by a company.
All asset, liability, equity, revenue and expense accounts.
Illustration 2-16
Slide
2-22
SO 5 Explain what a ledger is and how it helps in the recording process.
Answer on
notes page
Slide
2-23
SO 5 Explain what a ledger is and how it helps in the recording process.
The
The Ledger
Ledger
Standard Form of Account
T-account form used in accounting textbooks.
Ledger form used in practice.
Illustration 2-17
Slide
2-24
SO 5 Explain what a ledger is and how it helps in the recording process.
The
The Ledger
Ledger
Chart of Accounts
Illustration 2-18
Slide
2-25 SO 5 Explain what a ledger is and how it helps in the recording process.
Posting
Posting
Posting the
process of
transferring
amounts from
the journal to
the ledger
accounts.
Illustration 2-19
Slide
2-26 SO 6 Explain what posting is and how it helps in the recording process.
The
The Recording
Recording Process
Process Illustrated
Illustrated
Follow these steps:
1. Determine what
type of account
is involved.
2. Determine what
items increased
or decreased and
by how much.
3. Translate the
increases and
decreases into
debits and
credits.
Illustration 2-20
Slide
2-27 SO 6 Explain what posting is and how it helps in the recording process.
The
The Recording
Recording Process
Process Illustrated
Illustrated
Illustration 2-21
Slide
2-28 SO 6 Explain what posting is and how it helps in the recording process.
The
The Recording
Recording Process
Process Illustrated
Illustrated
Illustration 2-22
Slide
2-29 SO 6
The
The Recording
Recording Process
Process Illustrated
Illustrated
Illustration 2-23
Slide
2-30 SO 6
The
The Recording
Recording Process
Process Illustrated
Illustrated
Illustration 2-24
Slide
2-31 SO 6
The
The Recording
Recording Process
Process Illustrated
Illustrated
Illustration 2-25
Slide
2-32 SO 6
The
The Recording
Recording Process
Process Illustrated
Illustrated
Illustration 2-26
Slide
2-33 SO 6 Explain what posting is and how it helps in the recording process.
The
The Recording
Recording Process
Process Illustrated
Illustrated
Illustration 2-27
Slide
2-34 SO 6
The
The Recording
Recording Process
Process Illustrated
Illustrated
Illustration 2-28
Slide
2-35 SO 6
The
The Recording
Recording Process
Process Illustrated
Illustrated
Illustration 2-29
Slide
2-36 SO 6
Posting
Posting
Review Question
Posting:
a. normally occurs before journalizing.
b. transfers ledger transaction data to the journal.
c. is an optional step in the recording process.
d. transfers journal entries to ledger accounts.
Solution on
notes page
Slide
2-37 SO 6 Explain what posting is and how it helps in the recording process.
The
The Recording
Recording Process
Process Illustrated
Illustrated
Katherine Turner recorded the following
transactions during the month of March.
Solution on
Slide
2-38 notes page SO 6
The
The Trial
Trial Balance
Balance
Illustration 2-32
A list of accounts
and their
balances at a
given time.
Purpose is to
prove that debits
equal credits.
Slide
2-39 SO 7 Prepare a trial balance and explain its purposes.
The
The Trial
Trial Balance
Balance
Slide
2-40 SO 7 Prepare a trial balance and explain its purposes.
Answer on
Slide
2-41 notes page SO 7 Prepare a trial balance and explain its purposes.
The
The Trial
Trial Balance
Balance
The accounts
come from the
ledger of Christel Corporation
Trial Balance (in thousands)
Christel December 31, 2011
Corporation at
December 31,
2011.
Solution on
Slide
2-42 notes page SO 7
Understanding
Understanding U.S.
U.S. GAAP
GAAP
Slide
2-43
Understanding
Understanding U.S.
U.S. GAAP
GAAP
Slide
2-44
Understanding
Understanding U.S.
U.S. GAAP
GAAP
Slide
2-45
Copyright
Copyright
Copyright 2011 John Wiley & Sons, Inc. All rights reserved.
Reproduction or translation of this work beyond that permitted in
Section 117 of the 1976 United States Copyright Act without the
express written permission of the copyright owner is unlawful.
Request for further information should be addressed to the
Permissions Department, John Wiley & Sons, Inc. The purchaser
may make back-up copies for his/her own use only and not for
distribution or resale. The Publisher assumes no responsibility for
errors, omissions, or damages, caused by the use of these
programs or from the use of the information contained herein.
Slide
2-46