ACC 300 Transaction Analysis Accrual vs. Cash accounting Developing the Statements •Basic building block of the statements is the individual transaction Sale, purchase, payment, ... •The accounting process shows how to go from transactions to statements Analyze Journalize Post to T‐Accounts 2 This document is authorized for use byVy Dang, from 8/29/2022 to 12/19/2022, in the course: ACC 300 - Financial Accounting - Kama, Anderson, Mehta (Fall 2022), University of Michigan, Ann Arbor. Any unauthorized use or reproduction of this document is strictly prohibited*.
Analyzing Transactions - Balance Sheet Balance Sheet Assets=Liabilities+ Equity Cash+Inventory+PP&E=AccountsPayable+NotesPayable+ CommonStock+ Retained Earnings = Goal: Understand how each transaction effects the accounting equation. Assets=Liabilities+Equity Example •We start a new business and make the following transactions (1) Contribute $400 in cash as initial capital (2) Borrow $200 from the bank (3) Purchase a computer for $300 cash (4) Purchase merchandise for $50 on account •How does each of these transactions affect the balance sheet? 4 This document is authorized for use byVy Dang, from 8/29/2022 to 12/19/2022, in the course: ACC 300 - Financial Accounting - Kama, Anderson, Mehta (Fall 2022), University of Michigan, Ann Arbor. Any unauthorized use or reproduction of this document is strictly prohibited*.
Analyze Transactions TransactionAssets=Liabilities+Equity (1)$400=+$400 (2)$200=$200 (3)‐$300 + $300= (4)$50=$50 (Balance)$650=$250+$400 5 Journalizing and Posting •Bookkeeping is the process of recording the transactions in the company books •Based on the debit‐credit system AssetsShareholders' Equity Liabilities=+DebitCreditDebitCreditDebitCredit
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