PENGANTAR AKUNTANSI I
FOTO/VIDEO
Dosen: Molina, SE., M.Si., Ak., CA
The Recording Process
PREVIEW OF CHAPTER 2
Financial Accounting
IFRS 3rd Edition
Weygandt ● Kimmel ● Kieso
CHAPTER
2 The Recording Process
LEARNING OBJECTIVES
After studying this chapter, you should be able to:
1. Explain what an account is and how it helps in the recording process.
2. Define debits and credits and explain their use in recording business
transactions.
3. Identify the basic steps in the recording process.
4. Explain what a journal is and how it helps in the recording process.
5. Explain what a ledger is and how it helps in the recording process.
6. Explain what posting is and how it helps in the recording process.
7. Prepare a trial balance and explain its purposes.
The Account
Learning
Objective 1 u Record of increases and decreases in
Explain what an a specific asset, liability, stockholders’
account is and equity, revenue, or expense item.
how it helps in
the recording u Debit = “Left”
process.
u Credit = “Right”
Account Name
An account can Debit / Dr. Credit / Cr.
be illustrated in a
T-account form.
LO 1
Debits and Credits
Learning
DEBIT AND CREDIT PROCEDURES Objective 2
Define debits and
credits and
Double-entry system explain their use
in recording
u Each transaction must affect two or more business
transactions.
accounts to keep the basic accounting
equation in balance.
u Recording done by debiting at least one account and
crediting at least one other account.
u DEBITS must equal CREDITS.
LO 2
Debits and Credits
If the sum of Debit entries are greater than the sum of
Credit entries, the account will have a debit balance.
Account Name
Debit / Dr. Credit / Cr.
Transaction #1 $10,000 $3,000 Transaction #2
Transaction #3 8,000
Balance $15,000
LO 2
Debits and Credits
If the sum of Credit entries are greater than the sum of
Debit entries, the account will have a credit balance.
Account Name
Debit / Dr. Credit / Cr.
Transaction #1 $10,000 $3,000 Transaction #2
8,000 Transaction #3
Balance $1,000
LO 2
Debits and Credits
Assets u Assets - Debits should exceed
Debit / Dr. Credit / Cr.
credits.
u Liabilities – Credits should
Normal Balance
exceed debits.
Normal balance is on the
Chapter
u
3-23
increase side.
Liabilities
Debit / Dr. Credit / Cr.
Normal Balance
Chapter
3-24
LO 2
Debits and Credits
Equity u Issuance of share capital and
Debit / Dr. Credit / Cr.
revenues increase equity (credit).
u Dividends and expenses decrease
Normal Balance
equity (debit).
Chapter
3-25
Share Capital-Ordinary Retained Earnings Dividends
Debit / Dr. Credit / Cr. Debit / Dr. Credit / Cr. Debit / Dr. Credit / Cr.
Normal Balance Normal Balance Normal Balance
Chapter Chapter Chapter
3-25 3-25 3-23
LO 2
Debits and Credits
Revenues u The purpose of earning revenues
Debit / Dr. Credit / Cr.
is to benefit the shareholders.
u The effect of debits and credits on
Normal Balance
revenue accounts is the same as
Chapter
3-26
their effect on equity.
u Expenses have the opposite
Expenses
Debit / Dr. Credit / Cr.
effect: expenses decrease equity.
Normal Balance
Chapter
3-27
LO 2
Debits and Credits
Liabilities
Debit / Dr. Credit / Cr.
Normal Normal
Balance Balance
Debit Credit Normal Balance
Assets Chapter
3-24
Equity
Debit / Dr. Credit / Cr.
Debit / Dr. Credit / Cr.
Normal Balance
Normal Balance
Chapter
3-23
Expenses Chapter
3-25
Revenues
Debit / Dr. Credit / Cr.
Debit / Dr. Credit / Cr.
Normal Balance
Normal Balance
Chapter
3-27 Chapter
3-26
LO 2
Summary of Debit/Credit Rules
Statement of Financial
Position Income Statement
Asset = Liability + Equity Revenue - Expense
Debit
Credit
LO 2
Summary of Debit/Credit Rules
Question
Debits:
a. increase both assets and liabilities.
b. decrease both assets and liabilities.
c. increase assets and decrease liabilities.
d. decrease assets and increase liabilities.
LO 2
Summary of Debit/Credit Rules
Question
Accounts that normally have debit balances are:
a. assets, expenses, and revenues.
b. assets, expenses, and equity.
c. assets, liabilities, and dividends.
d. assets, dividends, and expenses.
LO 2
Equity
Relationships
Illustration 2-11
Equity relationships
LO 2
Summary of Debit/Credit Rules
Relationship among the assets, liabilities, and equity of a
business:
Illustration 2-12
Summary of debit/credit rules
The equation must be in balance after every transaction.
Total Debits must equal total Credits.
LO 2
The Account
Learning
Business documents, such as a sales Objective 3
Identify the basic
receipt, a check, or a bill, provide evidence steps in the
of the transaction. recording
process.
Analyze each transaction Enter transaction in a journal Transfer journal information to
ledger accounts
Illustration 2-13
The recording process
LO 3
Steps in the Recording Process
Learning
The Journal Objective 4
Explain what a
journal is and
u Book of original entry. how it helps in
the recording
u Transactions recorded in chronological process.
order.
u Contributions to the recording process:
1. Discloses the complete effects of a transaction.
2. Provides a chronological record of transactions.
3. Helps to prevent or locate errors because the debit
and credit amounts can be easily compared.
LO 4
The Journal
JOURNALIZING - Entering transaction data in the journal.
Illustration: On September 1, shareholders invested €15,000 cash
in the corporation in exchange for ordinary shares, and Softbyte
purchased computer equipment for €7,000 cash.
Illustration 2-14
GENERAL JOURNAL
Date Account Title Ref. Debit Credit
Sept. 1 Cash 15,000
Share Capital—Ordinary 15,000
Equipment 7,000
Cash 7,000
LO 4
The Journal
SIMPLE AND COMPOUND ENTRIES
Illustration: On July 1, Tsai Company purchases a delivery truck
costing NT$420,000. It pays NT$240,000 cash now and agrees to
pay the remaining NT$180,000 on account. Illustration 2-15
Compound journal entry
GENERAL JOURNAL
Date Account Title Ref. Debit Credit
July 1 Equipment 420,000
Cash 240,000
Accounts Payable 180,000
LO 4
> DO IT!
As president and sole shareholder, Kate Browne engaged in
the following activities in establishing her salon, Hair It Is
Company SA.
1. Opened a bank account in the name of Hair It Is Company
SA and deposited €20,000 of her own money in this
account in exchange for ordinary shares.
2. Purchased equipment on account (to be paid in 30 days)
for a total cost of €4,800.
3. Interviewed three applicants for the position of beautician.
Prepare the entries to record the transactions.
LO 4
> DO IT!
Prepare the entries to record the transactions.
1. Opened a bank account and deposited €20,000.
Cash 20,000
Share Capital—Ordinary 20,000
2. Purchased equipment on account (to be paid in 30 days)
for a total cost of €4,800.
Equipment 4,800
Accounts Payable 4,800
3. Interviewed three applicants for the position of beautician.
No entry
LO 4
Steps in the Recording Process
Learning
The Ledger Objective 5
Explain what a
ledger is and
u General Ledger contains all the asset,
how it helps in
liability, and equity accounts. the recording
process.
Illustration 2-16
The general ledger
LO 5
The Ledger
STANDARD FORM OF ACCOUNT Illustration 2-17
Three-column form
of account
LO 5
Posting
Learning
Objective 6
Explain what
posting is and
how it helps in
the recording
process.
Transferring
journal entries
to the ledger
accounts.
Illustration 2-18
Posting a journal
entry
LO 6
Posting
Question
Posting:
a. normally occurs before journalizing.
b. transfers ledger transaction data to the journal.
c. is an optional step in the recording process.
d. transfers journal entries to ledger accounts.
LO 6
Illustration 2-19
Chart of accounts for Yazici Advertising A.S¸ .
LO 6
The Recording Process Illustrated
Follow these steps:
1. Determine what
type of account is
involved.
2. Determine what
items increased or
decreased and by
how much.
3. Translate the
increases and
decreases into
debits and credits.
Illustration 2-20
Investment of cash
by shareholders
LO 6
Illustration 2-21
Purchase of office equipment LO 6
Illustration 2-22
Receipt of cash
for future service
LO 6
Illustration 2-23
Payment of monthly rent LO 6
Illustration 2-24
Payment for
insurance
LO 6
Illustration 2-25
Purchase of supplies on credit LO 6
The Recording Process Illustrated
Illustration 2-26
Hiring of employees
LO 6
Illustration 2-27
Declaration and payment of dividend LO 6
Illustration 2-28
Payment of salaries LO 6
Illustration 2-29
Receipt of cash for services performed LO 6
> DO IT!
Como Company SpA recorded the following transactions in a general
journal during the month of March. Post these entries to the Cash
account.
Mar. 4 Cash 2,280
Service Revenue 2,280
15 Salaries and Wages Expense 400
Cash 400
19 Utilities Expense 92
Cash 92
LO 6
Illustration 2-30 LO 6
General journal entries
Illustration 2-30
General journal entries
LO 6
Illustration 2-31
General ledger
LO 6
The Trial Balance
Learning
A trial balance Objective 7
Prepare a trial
u is a list of accounts and their balances balance and
explain its
at a given time. purposes.
u proves the mathematical equality of debits and credits
after posting.
The steps for preparing a trial balance are:
1. List the account titles and their balances.
2. Total the debit and credit columns.
3. Prove the equality of the two columns.
LO 7
Trial Balance
Illustration 2-32
A trial balance
LO 7
Limitations of a Trial Balance
Trial balance may balance even when:
1. A transaction is not journalized.
2. A correct journal entry is not posted.
3. A journal entry is posted twice.
4. Incorrect accounts are used in journalizing or posting.
5. Offsetting errors are made in recording the amount of a
transaction.
LO 7
Currency Signs and Underlining
Currency Signs
u Do not appear in journals or ledgers.
u Typically used only in the trial balance and the financial
statements.
u Shown only for the first item in the column and for the total
of that column.
Underlining
u A single line is placed under the column of figures to be
added or subtracted.
u Totals are double-underlined.
LO 7
> DO IT!
LO 7
LO 7
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