PPT - Recording of Transactions Commerce Notes | EduRev

Accountancy Class 11

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Commerce : PPT - Recording of Transactions Commerce Notes | EduRev

 Page 1


Recording Transactions
Page 2


Recording Transactions
Learning Objectives
After studying this chapter, you should be able to
1. Use double-entry accounting
2. Analyze and journalize transactions
3. Post journal entries to the ledgers
4. Prepare and use a trial balance
5. Close revenue and expense accounts and update 
retained earnings
6. Correct erroneous journal entries and describe how 
errors affect accounts
7. Explain how computers have transformed 
processing of accounting data
Page 3


Recording Transactions
Learning Objectives
After studying this chapter, you should be able to
1. Use double-entry accounting
2. Analyze and journalize transactions
3. Post journal entries to the ledgers
4. Prepare and use a trial balance
5. Close revenue and expense accounts and update 
retained earnings
6. Correct erroneous journal entries and describe how 
errors affect accounts
7. Explain how computers have transformed 
processing of accounting data
The Double-Entry Accounting System
•
In the double-entry system, every transaction 
affects at least two accounts
•
After each transaction, the balance sheet 
equation must always remain in balance
•
This balance sheet format is too cumbersome 
for recording each and every transaction 
Assets = Liabilities + Stockholders’ Equity
Page 4


Recording Transactions
Learning Objectives
After studying this chapter, you should be able to
1. Use double-entry accounting
2. Analyze and journalize transactions
3. Post journal entries to the ledgers
4. Prepare and use a trial balance
5. Close revenue and expense accounts and update 
retained earnings
6. Correct erroneous journal entries and describe how 
errors affect accounts
7. Explain how computers have transformed 
processing of accounting data
The Double-Entry Accounting System
•
In the double-entry system, every transaction 
affects at least two accounts
•
After each transaction, the balance sheet 
equation must always remain in balance
•
This balance sheet format is too cumbersome 
for recording each and every transaction 
Assets = Liabilities + Stockholders’ Equity
Ledger Accounts
•
The elements of transactions are organized into 
accounts that group similar items together
•
In a double-entry system, a ledger contains the 
records for a group of related accounts
•
A general ledger is the collection of accounts 
that accumulate the amounts reported in the 
financial statements
Page 5


Recording Transactions
Learning Objectives
After studying this chapter, you should be able to
1. Use double-entry accounting
2. Analyze and journalize transactions
3. Post journal entries to the ledgers
4. Prepare and use a trial balance
5. Close revenue and expense accounts and update 
retained earnings
6. Correct erroneous journal entries and describe how 
errors affect accounts
7. Explain how computers have transformed 
processing of accounting data
The Double-Entry Accounting System
•
In the double-entry system, every transaction 
affects at least two accounts
•
After each transaction, the balance sheet 
equation must always remain in balance
•
This balance sheet format is too cumbersome 
for recording each and every transaction 
Assets = Liabilities + Stockholders’ Equity
Ledger Accounts
•
The elements of transactions are organized into 
accounts that group similar items together
•
In a double-entry system, a ledger contains the 
records for a group of related accounts
•
A general ledger is the collection of accounts 
that accumulate the amounts reported in the 
financial statements
Ledger Accounts
•
A T-account is a simplified version of accounts 
used in practice
•
The vertical line in the T divides the account into 
left and right sides for recording increases and 
decreases
•
The account title is on the horizontal line
Cash
Left side
(Increases in cash)
Right side
(Decreases in cash)
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