LEARNING OBJECTIVES
CONCEPTUAL
1. C1Explain the steps in processing transactions and the role of source documents.
2. C2Describe an account and its use in recording transactions.
3. C3Describe a ledger and a chart of
...
LEARNING OBJECTIVES
CONCEPTUAL
1. C1Explain the steps in processing transactions and the role of source documents.
2. C2Describe an account and its use in recording transactions.
3. C3Describe a ledger and a chart of accounts.
4. C4Define debits and credits and explain double-entry accounting.
ANALYTICAL
1. A1Analyze the impact of transactions on accounts and financial statements.
2. A2Compute the debt ratio and describe its use in analyzing financial condition.
PROCEDURAL
1. P1Record transactions in a journal and post entries to a ledger.
2. P2Prepare and explain the use of a trial balance.
3. P3Prepare financial statements from business transactions.
SYSTEM OF ACCOUNTS
C1
Explain the steps in processing transactions and the role of source
documents.
Business transactions and events are the starting points of financial
statements. The process to get from transactions and events to financial
statements includes the following:
Identify each transaction and event from source documents.
Analyze each transaction and event using the accounting equation.
Record relevant transactions and events in a journal.
Post journal information to ledger accounts.
Prepare and analyze the trial balance and financial statements.
Source Documents
Source documents identify and describe transactions and events entering
the accounting system. They can be in either hard copy or electronic
form. Examples are sales tickets, checks, purchase orders, bills from
suppliers, employee earnings records, and bank statements. For example,
cash registers record information for each sale on a tape or electronic file
locked inside the register. This record is a source document for recording
sales in the accounting records. Source documents are objective and
reliable evidence about transactions and events and their amounts.
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