Analyzing & Recording
Business Transactions
Chapter 2
Source documents

Identify and describe transactions
and events entering the accounting
process.
Account
Is a record of increases and
decreases in a specific asset,
liability, equity, revenue or expense
 Ledger


Is a record containing all accounts used
by a company
Assets


Cash
Accounts
receivable





What customers
owe us
Note receivable
Prepaid Accounts
Supplies
Equipment
Liabilities

Accounts payable



Money owed to
suppliers
Notes payable
Unearned revenue

Deposits from
customers
Equity

Common Stock


Dividends


Shareholders
investment in the
business
Distributions of
income to
shareholders
Retained Earnings
Chart of Accounts
List of an accounts a company uses
and includes an idea.
 101-199 Assets
 201-299 Liabilities
 301-399 Equity
 401-499 Revenues
 501-599 Expenses

T- Accounts
Debit
Credit
Left side
Right side
Accounting Equation
Assets
DR CR


=
Liabilities
DR

CR

+
Equity
DR
CR


Double entry accounting: each transactions affect,
And recorded in, at least two accounts
Debits = Credits
Journal

Journal

Gives a complete
record of each
transaction in one
place

Journalizing


Process of
recording
transactions
Posting

Process of
transferring journal
entry info to the
ledger
Journal
Date
Account
PR
Debit
Credit
Journal Entries

Go to excel worksheet
Transactions
Shareholder invests in the business
$30,000 in cash
 Co pays $2,500 cash for supplies
 Co pays $26,000 cash for equipment
 Co purchases $7,100 of supplies on
account ( on credit)
 Co provides consulting services and
collects $4,200 cash

Transactions
Co pays for $1,000 cash for rent
 Co pays $700 cash for salaries
 Co provides consulting services of
$1,600 and bills the customer
 Co receives $1,600 cash from the
client billed
 Co pays $900 on account
 Co pays dividends $1,000

Transactions
Co receives $3,000 cash in advance
 Co pays $2,400 cash for insurance
for one year

Posting to the ledger
Record the transactions into ledger
by account name
 Prepare a TRIAL BALANCE


List of accounts and balances