AC101-M8 Chapter 2
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Transcript of AC101-M8 Chapter 2
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LECTURE2
Instructor: Keo Sopheak
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1-Basic Accounting Equation
2-The Account
3-T-account/Debit and Credit
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1-Basic Accounting Equation
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Transaction (1): Ray Neal decides to open a computer programming
service which he names Softbyte. On September 1, 2012, Ray Neal
invests $15,000 cash in the business.
Transaction Analysis
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Transaction (2): Purchase of Equipment for Cash. Softbyte purchases
computer equipment for $7,000 cash.
SO 7
Transaction Analysis
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Transaction (3): Softbyte purchases for $1,600 from Acme Supply
Company computer paper and other supplies expected to last several
months. The purchase is made on account.
SO 7
Transaction Analysis
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Transaction (4): Softbyte receives $1,200 cash from customers for
programming services it has provided.
SO 7
Transaction Analysis
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Transaction (5): Softbyte receives a bill for $250 from the Daily News
for advertising but postpones payment until a later date.
Transaction Analysis
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Transaction (5): Softbyte receives a bill for $250 from the Daily News
for advertising but postpones payment until a later date.
Transaction Analysis
9,200$ 1,600$-$ 7,000$ 15,000$ -$ 1,200$ (250)$1,850$
$17,800 $17,800
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Current Asset 1year
1xxx9
1-Basic Accounting Equation
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Current Liabilities orShort term Liabilities
Long Term Liabilities
2xxx9
1year
1-Basic Accounting Equation
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3xxx9 3xxx9 4xxx9 5xxx9
1-Basic Accounting Equation
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Account: Record of increases and decreases in a specific
asset, liability, equity, revenue, or expense item.
2-The Account
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Current Asset
10100 Cash on Hand10110 Petty Cash10400 Saving Account11200 Inventory Asset12010 Note Receivable13000 Prepaid Profit Tax13030 Office Supply14001 Prepaid Insurance14003 Prepaid Advertising14013 Prepaid Rent14100 Vendor Advance14101 Advance Salary14300 VAT Input14600 VAT Credit Carry Forwards14700 Employee Advances
2-The Account
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Fixed Asset
12100 Computer13000 Furniture14000 Fax & Phone15000 Office Equipment15300 Other Depreciable Property15400 Leasehold Improvement15600 Building Improvement15700 Machine15800 Light16000 Vehicle17000 Building18000 Land19200 Vehicle Insurance
2-The Account
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Current Liabilities orShort term Liabilities
20000 Account Payable20005 Credit Card
20010 Note Payable
21000 Payroll Liabilities
21001 Salary Tax Payable
23400 VAT Payable
24800 Utilities Payable
24900 Phone, Fax & Email Payable
25000 Rent & Lease Payable
26000 Unearned Fees
2-The Account
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Long Term Liabilities
27500 Bond Payable
27600 Debt
40000 Passenger Service Revenue
40000 Sale
40400 Consulting Fees
2-The Account
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60000 Advertising Expense
60001 Salary Expense60020 Depreciation Expense
60030 License Amortization Expense
60100 Transport-Expense
60300 Other Expense61500 Bad Debt Expense
66500 Insurance Expenses
69500 Maintenance Expense
69990 Uncategorized Expenses
70000 Repair and Maintenance
2-The Account
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70010 Gasoline Expense
74000 Penalty Tax
75002 Wage Expense
76000 Freight Expense
76001 Tax Expense
78000 Travel Expense
78010 Fax and Phone Expense
78030 Cleaning Expense78100 Imported Tax
78300 Miscellaneous
78400 Clearances
78500 Utilities Expense79001 Clearance Expense
85001 Bank Charge
90000 Interest Expense
2-The Account
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Debit: An entry in the financial books of a firm that increasesan asset or an expense or an entry that decreases a liability,owner's equity (capital) or income.
Credit: An entry in the financial books of a firm that increasesa liability, owner's equity (capital) or revenue, or an entry thatdecreases an asset or an expense.
3-T-account/Debit and Credit
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ASSETS LIABILITIES EQUITIES
3-T-account/Debit and Credit
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Revenues Expenses
Owners
Capital
Owner's
Withdrawals
_+
_
Equity
3-T-account/Debit and Credit
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Account Name
Debit / Dr. Credit / Cr.
If Debits are greater than Credits, the account will havea debit balance.
$10,000 Transaction #2$3,000
$15,000
8,000Transaction #3
Balance
Transaction #1
3-T-account/Debit and Credit
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Account Name
Debit / Dr. Credit / Cr.$10,000 Transaction #2$3,000
Balance
Transaction #1
$1,000
8,000 Transaction #3
If Debits are less than Credits, the account will have acredit balance.
Debits and Credits
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Assets - Debits should exceedcredits.
Liabilities Credits should
exceed debits.
Normal balance is on the
increase side.
Chapter3-23
AssetsAssets
Debit / Dr. Credit / Cr.
Normal BalanceNormal Balance
Chapter3-24
LiabilitiesLiabilities
Debit / Dr. Credit / Cr.
Normal BalanceNormal Balance
Debits and Credits
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Owners investments andrevenues increase owners equity
(credit).
Owners drawings and expenses
decrease owners equity (debit).
Chapter3-25
Debit / Dr. Credit / Cr.
Normal BalanceNormal Balance
OwnerOwners Capitals Capital
Chapter3-23
OwnerOwners Drawings Drawing
Debit / Dr. Credit / Cr.
Normal BalanceNormal Balance
Chapter3-25
Debit / Dr. Credit / Cr.
Normal BalanceNormal Balance
OwnerOwners Equitys Equity
Debits and Credits
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Purpose of earning revenues is tobenefit the owner(s).
Effect of debits and credits on
revenue accounts is the same as
their effect on Owners Capital.
Expenses have the opposite effect:
expenses decrease owners equity.
Chapter3-27
Debit / Dr. Credit / Cr.
Normal BalanceNormal Balance
ExpenseExpense
Chapter3-26
Debit / Dr. Credit / Cr.
Normal BalanceNormal Balance
RevenueRevenue
Debits and Credits
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Chapter3-23
AssetsAssets
Debit / Dr. Credit / Cr.
Normal BalanceNormal Balance
Chapter3-27
Debit / Dr. Credit / Cr.
Normal BalanceNormal Balance
ExpenseExpense
Normal
BalanceCredit
Normal
BalanceDebit
Debits/Credits Rules
Chapter
3-24
LiabilitiesLiabilities
Debit / Dr. Credit / Cr.
Normal BalanceNormal Balance
Chapter
3-25
Debit / Dr. Credit / Cr.
Normal BalanceNormal Balance
OwnersOwners EquityEquity
SO 2
Chapter3-26
Debit / Dr. Credit / Cr.
Normal BalanceNormal Balance
RevenueRevenue
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