chapter3会计英语.pptVIP

Chapter 3 Recording Business Transactions Outline of Chapter 3 Double-Entry Bookkeeping Recording Business Transaction Illustrative Problem The Trial Balance 3.1 Double-Entry Bookkeeping Definition of Double-Entry Bookkeeping The double-entry system is based on the principle of duality, which means that all events of economic importance have two aspects-effort and reward, sacrifice and benefit, source and use-that offset or balance each other. In the double-entry system each transaction must be recorded twice, in such a way that the total debits and total credits equal each other . Rules of Bookkeeping : every transaction affects at least two accounts. the total debits and total credits equal each other ; these rules can be shown as follows： 3.1 Double-Entry Bookkeeping Transaction 1: John Smith invested the $50,000; he inherited in cash to begin his law practice. What accounts are affected? By what’s the amount? On what side (debit or credit)? Answer : 3.1 Double-Entry Bookkeeping Transaction 2: $40,000 cash to purchase land. Answer : 3.1 Double-Entry Bookkeeping Transaction 3: $500 purchase of office supplies on account. Answer : 3.2 Recording Business Transaction Step1:Analyze the effect of the transaction on assets，1iabilities, and owners ‘equity． Step2:Apply the correct double-entry rule． Step3:Make the entry． 3.2 Recording Business Transaction 3.2.1 Recording Transactions in Journals Journal: In actual practice, accountants record transactions first in a book called the journal. A journal is a chronological record of the entitys transactions. The recording process: Identify the transactions from source documents; Specify each account affected by the transaction and classify it by type; Determine whether each account is increased or decreased by the transaction; Using the rules of debit and credit, determine whether to debit or credit the account; Enter the transaction in the journal, including a brief explanation for t