Financial Accounting

3.

The Accounting Information System and Cycle

3.1.

The Basic Accounting Equation

3.1.1.

Assets = Liabilities + Equity

3.1.2.

Expanded Accounting Equation

3.1.3.

Impact of Transactions on the Equation

3.2.

Transaction Analysis

3.2.1.

Identifying Transactions and Events

3.2.2.

Source Documents

3.2.3.

Analyzing Effects on Accounts

3.2.4.

Dual Effect Concept

3.3.

Debits and Credits

3.3.1.

Rules of Debit and Credit

3.3.2.

Normal Balances

3.3.3.

T-Account Analysis

3.4.

The General Journal

3.4.1.

Purpose and Format

3.4.2.

Journalizing Transactions

3.4.2.1.

Components of Journal Entries

3.4.2.2.

Supporting Documentation

3.4.2.3.

Compound Journal Entries

3.5.

The General Ledger

3.5.1.

Purpose and Structure

3.5.2.

Chart of Accounts

3.5.3.

Posting Process

3.5.4.

3.5.5.

Running Balance Format

3.6.

The Trial Balance

3.6.1.

Purpose of Trial Balance

3.6.2.

Preparing the Unadjusted Trial Balance

3.6.3.

Limitations of Trial Balance

3.6.4.

Identifying and Correcting Errors

3.7.

Accrual vs. Cash-Basis Accounting

3.7.1.

Definitions and Key Differences

3.7.2.

Timing of Recognition

3.7.3.

Advantages and Disadvantages

3.7.4.

GAAP Requirements

3.8.

Adjusting Entries

3.8.1.

Purpose and Timing of Adjustments

3.8.2.

Types of Adjusting Entries

3.8.3.

3.8.3.1.

Prepaid Expenses

3.8.3.2.

Unearned Revenues

3.8.4.

3.8.4.1.

Accrued Revenues

3.8.4.2.

Accrued Expenses

3.8.5.

3.8.5.1.

3.8.5.2.

Bad Debt Expense

3.9.

Preparing the Adjusted Trial Balance

3.9.1.

Purpose and Process

3.9.2.

Verification of Equality

3.10.

Preparing Financial Statements

3.10.1.

Order of Preparation

3.10.2.

Income Statement

3.10.3.

Statement of Retained Earnings

3.10.4.

3.10.5.

Statement of Cash Flows

3.10.6.

Interrelationships Among Statements

3.11.

Closing Entries

3.11.1.

Purpose of Closing Process

3.11.2.

Temporary vs. Permanent Accounts

3.11.3.

Steps in Closing Process

3.11.3.1.

Closing Revenue Accounts

3.11.3.2.

Closing Expense Accounts

3.11.3.3.

Closing Income Summary

3.11.3.4.

Closing Dividends

3.12.

Preparing the Post-Closing Trial Balance

3.12.1.

Purpose and Contents

3.12.2.

Verification Process

3.13.

Reversing Entries

3.13.1.

Purpose and Benefits

3.13.2.

When to Use Reversing Entries

3.13.3.

Examples of Reversing Entries

Previous

2. The Conceptual Framework of Financial Reporting

Go to top

Next

4. The Core Financial Statements