Chapter 2 Measuring Business Transactions

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Table of Contents

Chapter 2 Measuring Business Transactions

LEARNING OBJECTIVES

LEARNING OBJECTIVES (continued)

Measurement Issues

Measurement Issues

The Recognition Issue

The Valuation Issue

The Cost Principle

The Classification Issue

Discussion

Accounts and the Chart of Accounts

Accounts

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The Chart of Accounts

Stockholdersí Equity Accounts

Stockholdersí Equity Accounts

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Account Titles

Discussion

The Double-Entry System: The Basic Method of Accounting

The Double-Entry System

Features of the Double-Entry System

The T Account

The T Account Illustrated

Analyzing and Processing Transactions

Application of Debit/Credit Rules to S/E

Arrangement of the Accounting Equation

Steps in Analyzing and Processing Transactions

Steps in Analyzing and Processing Transactions (continued)

Steps in Analyzing and Processing Transactions (continued)

Discussion

Transaction Analysis Illustrated

Joan Miller begins business.

Joan Miller begins business.

Rents an office, pays $800 rent in advance.

Rents an office, pays $800 rent in advance.

Purchases art equipment, $4,200, with cash.

Purchases art equipment, $4,200, with cash.

Purchases office equipment, $3,000, pays $1,500 in cash and agrees to pay the rest next month.

Purchases office equipment, $3,000, pays $1,500 in cash and agrees to pay the rest next month.

Purchases art supplies, $1,800, and office supplies, $800, on credit.

Purchases art supplies, $1,800, and office supplies, $800, on credit.

Pays for a one-year insurance policy with cash.

Pays for a one-year insurance policy with cash.

Pays $1,000 of amount owed to Taylor Supply Co.

Pays $1,000 of amount owed to Taylor Supply Co.

Collects a fee of $1,400 for placing advertisements.

Collects a fee of $1,400 for placing advertisements.

Pays the secretary two weeksí wages, $600.

Pays the secretary two weeksí wages, $600.

Accepts $1,000 for art work to be done for another agency.

Accepts $1,000 for art work to be done for another agency.

Performs a service for $2,800. Fee to be collected next month.

Performs a service for $2,800. Fee to be collected next month.

Pays the secretary two more weeksí wages, $600.

Pays the secretary two more weeksí wages, $600.

Receives and pays the utility bill, $100.

Receives and pays the utility bill, $100.

Receives (but does not pay) telephone bill, $70.

Receives (but does not pay) telephone bill, $70.

Declared and paid a dividend of $1,400.

Declared and paid a dividend of $1,400.

Discussion

The Trial Balance

The Trial Balance

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Discussion

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Author: Needles & Powers