Financial Accounting: A User Perspective 6th Canadian Edition

chapter 3

PROCESSING DATA THROUGH THE ACCOUNTING SYSTEM

USER RELEVANCE

DOUBLE-ENTRY ACCOUNTING SYSTEMS

Debits and Credits

Statement of Financial Position

UNDERSTANDING THE ACCOUNTING CYCLE

The Chart of Accounts

The Opening Balances

TRANSACTIONS

Analyzing Transactions

Recording Transactions in a Journal

RECORDING IN JOURNAL, LEDGER, AND TRIAL BALANCE

Posting to the Ledger

Preparing a Trial Balance

Recording Adjusting Entries

Preparing an Adjusted Trial Balance

PREPARING FINANCIAL STATEMENTS AND CLOSING ENTRIES

Preparing the Financial Statements

Preparing the Closing Entries

Accounting Cycle Frequency

SUMMARY

LEARNING OBJECTIVES

After studying this chapter, you should be able to:

1. Explain the role of debits and credits in the accounting system.
2. Explain the difference between permanent and temporary accounts.
3. Identify and explain the steps in the accounting cycle.
4. Build a chart of accounts based on transactions that affect the company's assets, liabilities, and/or shareholder equity.
5. Analyze transactions and record them in journal entry format.
6. Post transactions from the journal to the ledger.
7. Prepare a trial balance and use it to identify errors.
8. Make adjusting entries to prepare an adjusted trial balance.
9. Prepare financial statements.
10. Explain closing entries and why they are necessary.

Learning to Handle the Dough

For generations, grandmothers in Grant Hooker's family would make a pastry of flattened, whole-wheat dough as a special treat, called a BeaverTail^®, which became ...