Acct 2210 Zeigler - Chp 3:
Double Entry Accounting (13 slides)
There are no new
transactions in Chapter 3.
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Only a new way to organize the
information using a “shorthand” tool.
 Let’s take some notes & start with
page 152 for an overview.
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The Accounting Cycle...
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Transactions (measurable financial events) occur in
the normal course of business.
These transactions are recorded in the General
Journal using Debits/Credits (discuss pg 152 data)
These journal entries are then “posted” to the
General Ledger (Collection of all accounts – pg 153)
Adjusting Entries are made/posted (pg 152/153)
Financial Stmts are then prepared (pg 154).
The Closing Process then takes place (pg 155).
The “General Journal” (Ex 3-2, pg 152)
3-3
What is a “Chart of
Accounts”?
3-4
The Accounting Process
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Along the way…. (see pg 154)
We can prepare a “Trial Balance” at any
time to “test the equality” of debits & credits.
Note: This is not a financial stmt, but…….
Remember.., the accounting equation must
always hold true and total debits must always
equal total credits.
Debits & Credits (pg 150)
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Every recordable transaction (event)
impacts at least two accounts.
 Double-entry bookkeeping
ANY account can be increased or
decreased.
Debit means “left side”
Credit means “right side”
Debits & Credits (pg 150)
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Assets:
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Liabilities and Equity:
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Increased with debits, Decreased with credits
Increased with credits, Decreased with debits
For each transaction:
DEBITS = CREDITS (No exceptions!)
We will use “T-Accounts” to analyze
the effect of any transaction.
“AJE’s” (from Chapter 2)….
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Accruals and Deferrals often necessitate the
use of Adjusting Journal Entries (AJE).
Adjusting Journal Entry: an entry required at
the end of the accounting period to properly
update the income stmt and balance sheet.
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i.e. adjusting entries update the account balances
prior to the creation of financial statements.
The Closing Process
Transfers net income
(or loss) and dividends
to Retained Earnings.
Establishes zero
balances in all revenue,
expense, and dividend
accounts.
Closing Entries (pg 155)
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“Temporary” accounts”:
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Income statement accounts, and
Dividends
These temporary accounts are closed
at the end of the accounting period.
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Brings their balances to ZERO.
Net Income and Dividends then flow into
Retained Earnings on the Balance Sheet.
Debits = Credits
And,.. to conclude prior to exam review,
a musical interlude to help us remember
debits and credits….
Who says accounting can’t be fun?
http://www.youtube.com/watch?v=j71Kmxv7smk