WILEY

IFRS EDITION

Prepared by
Coby Harmon
University
2-1
of California, Santa Barbara
Westmont College
 PREVIEW OF CHAPTER 2

Financial Accounting
IFRS 3rd Edition
Weygandt ● Kimmel ● Kieso
2-2
 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.
2-3
 Unsur-unsur dalam Financial Statements
disebut Rekening/Akun/account

2-4
 Account adl Catatan mengenai saldo dan
perubahan atas Harta, hutang, modal,
pendapatan dan Beban.
Kelompok akun yang sejenis disebut buku
besar (ledger).

Daftar dari akun-akun

dalam sebuah buku
besar disebut
daftar akun (chart of
account).

2-5
 Klasifikasi Akun

Kewajiban Ekuitas (Owner’s

Harta (Assets)
(Liabilities) equity) merupakan
merupakan sumber Akun
merupakan utang hak pemilik Neraca
daya yang dimiliki
terhadap pihak terhadap
perusahaan.
luar (kreditor). perusahaan.

Pendapatan (Revenues)
Beban (Expenses)
merupakan peningkatan Akun
merupakan penggunaan
pada ekuitas sebagai Laba
harta atau jasa untuk
hasil dari penjualan Rugi
memperoleh pendapatan.
barang atau jasa.

6
2-6
 The Account
Learning
Objective 1  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  Debit = ―Left‖
process.
 Credit = ―Right‖

Account Name
An account can Debit / Dr. Credit / Cr.
be illustrated in a
T-account form.

2-7 LO 1
 Bentuk Perkiraan yang
paling sederhana disebut
T Account.

2-8
 The T-Account
Cash

Diberi Judul
2-9
 The T-Account
Cash
Left side
debit

Sisi Kiri Akun disebut DEBIT

2-10
 The T-Account
Cash
Left side Right side
debit credit

Sisi Kanan Akun disebut KREDIT

2-11
 Debits and Credits
Learning
DEBIT AND CREDIT PROCEDURES Objective 2
Define debits and
credits and
Double-entry system explain their use
in recording
 Each transaction must affect two or more business
transactions.
accounts to keep the basic accounting
equation in balance.

 Recording done by debiting at least one account and

crediting at least one other account.

 DEBITS must equal CREDITS.

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 Sistem Pencatatan Ganda
(Double-Entry Accounting)

“ Sistem Pencatatan Ganda berdasarkan konsep

sederhana: setiap pihak dalam transaksi bisnis
akan menerima sesuatu dan memberikan sesuatu
sebagai imbalan. Dalam hal pembukuan, apa yang
diterima didebit dan apa yang diberikan dikredit.
Akun T (T-account) menggambarkan sebuah
neraca yang seimbang.”
Neraca Akun T

Sisi kiri Sisi kanan

menerima memberi
DEBIT KREDIT
Menerima Memberi
DEBIT KREDIT
13
2-13
 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

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 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

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 Debits and Credits

Assets  Assets - Debits should exceed

Debit / Dr. Credit / Cr.
credits.

 Liabilities – Credits should

Normal Balance
exceed debits.
Chapter

 Normal balance is on the

3-23

increase side.
Liabilities
Debit / Dr. Credit / Cr.

Normal Balance

Chapter
3-24

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 Aturan Debit dan Kredit Akun
Statement of Financial Position Accounts

ASSETS LIABILITIES
Asset Accounts Liability Accounts
Debit for Credit for Debit for Credit for
increases decreases decreases increases
(+) (-) (-) (+)

OWNER’S EQUITY
Owner’s Equity Accounts
Debit for Credit for
decreases increases
(-) (+)

2-17
 Debits and Credits

Equity  Issuance of share capital and

Debit / Dr. Credit / Cr.
revenues increase equity (credit).

 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

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 Debits and Credits

Revenues  The purpose of earning revenues

Debit / Dr. Credit / Cr.
is to benefit the shareholders.

 The effect of debits and credits on

Normal Balance
revenue accounts is the same as
Chapter
3-26
their effect on equity.

 Expenses have the opposite

Expenses
Debit / Dr. Credit / Cr.
effect: expenses decrease equity.

Normal Balance

Chapter
3-27

2-19 LO 2
 Rules of Debit / Credit
Income Statement Accounts
Expense Accounts Revenue Accounts
Debit for Credit for Debit for Credit for
increases decreases decreases increases
(+) (-) (-) (+)

2-20
 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

2-21
LO 2
 Summary of Debit/Credit Rules

Statement of
Financial Position Income Statement
Asset = Liability + Equity Revenue - Expense

Debit

Credit

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 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.

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 SALDO NORMAL
Increase
(Normal Balances) Decreases

Statement of Financial Position accounts:

Asset Debit Credit
Liability Credit Debit
Owner’s Equity:
Capital Credit Debit
Drawing Debit Credit
Income statement accounts:
Revenue Credit Debit
Expense Debit Credit

2-24
 Equity
Relationships

Illustration 2-11
Equity relationships

2-25 LO 2
 2-26
FINANCIAL REPORTING

Continue..
2-27
FINANCIAL REPORTING
 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

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 Alur Transaksi Bisnis

Persetujuan Transaksi Dokumen

1 transaksi 2 terjadi 3 disiapkan

Posting ke
4 Catat di jurnal 5 buku besar

29
2-29
 Steps in the Recording Process
Learning
1. The Journal Objective 4
Explain what a
journal is and
 Book of original entry. how it helps in
the recording
 Transactions recorded in chronological process.

order.

 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.
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 Analisa Transaksi
1. Tentukan Akun apa saja yang dipengaruhi
oleh suatu transaksi
2. Pengaruh thd Masing2 Akun tsb: Apakah
Menambah/Mengurang?
3. Dijurnal pada sisi Debit or Credit?

2-31
 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
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 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

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 > 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.

2-35 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
2-36 LO 4
 Steps in the Recording Process
Learning
2. The Ledger Objective 5
Explain what a
 General Ledger contains all the asset, ledger is and
how it helps in
liability, and equity accounts. the recording
process.

Illustration 2-16
The general ledger
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 ACCOUNTING ACROSS THE ORGANIZATION
What Would Sam Do? Wal-Mart Stores, Inc. (USA)
In his autobiography, Sam Walton described the double-entry
accounting system he used when Wal-Mart Stores, Inc. (USA) was
just getting started: ―We kept a little pigeonhole on the wall for the
cash receipts and paperwork of each [Wal-Mart] store. I had a blue
binder ledger book for each store. When we added a store, we
added a pigeonhole. We did this at least up to twenty stores. Then
once a month, the bookkeeper and I would enter the merchandise,
enter the sales, enter the cash, and balance it.‖ Today, the
company operates more than 7,000 stores worldwide under various
names. That’s a lot of ―pigeonholes.‖
Source: Sam Walton, Made in America (New York: Doubleday, 1992), p.
53.

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 The Ledger

STANDARD FORM OF ACCOUNT Illustration 2-17

Three-column form
of account

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 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

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 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.

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Illustration 2-19
Chart of accounts for Yazici Advertising A.S¸ .

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 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

2-43 LO 6
 Illustration 2-21
2-44 Purchase of office equipment LO 6
 Illustration 2-22
Receipt of cash
for future service

2-45 LO 6
2-46 Illustration 2-23
Payment of monthly rent LO 6
 Illustration 2-24
Payment for
insurance

2-47 LO 6
2-48 Illustration 2-25
Purchase of supplies on credit LO 6
 The Recording Process Illustrated

Illustration 2-26
Hiring of employees

2-49 LO 6
 Illustration 2-27
2-50 Declaration and payment of dividend LO 6
 Illustration 2-28
2-51
Payment of salaries LO 6
2-52 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

2-53 LO 6
2-54 Illustration 2-30 LO 6
General journal entries
 Illustration 2-30
General journal entries

2-55 LO 6
 Illustration 2-31
General ledger
2-56 LO 6
 The Trial Balance
Learning
A trial balance Objective 7
Prepare a trial
 is a list of accounts and their balances balance and
explain its
at a given time. purposes.

 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.

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 Trial Balance
Illustration 2-32
A trial balance

2-58 LO 7
 Limitations of a Trial Balance

Trial balance may balance even when:

(Kesalahan yang tidak menyebabkan neraca saldo tidak seimbang)

1. A transaction is not journalized.

(Tidak mencatat transaksi atau memposting transaksi.)

2. A correct journal entry is not posted.

(Mencatat dengan jumlah salah yang sama pada sisi debit dan kredit untuk suatu
transaksi.)

3. A journal entry is posted twice.

(Mencatat transaksi yang sama lebih dari sekali.)

4. Incorrect accounts are used in journalizing or posting.

(Memposting dengan jumlah yang benar namun pada akun yang salah.)

5. Offsetting errors are made in recording the amount of a

transaction.
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 Kesalahan (Errors)

Kesalahan yang menyebabkan neraca saldo tidak seimbang:

1. Salah dalam menyiapkan neraca saldo
• Salah menambahkan kolom
• Salah memasukkan jumlah saldo akun
• Saldo dimasukkan salah kolom atau tidak dimasukkan
2. Saldo akun salah
• Saldo salah dihitung
• Saldo dimasukkan salah kolom pada buku besar
3. Salah dalam memposting
• Jumlah yang diposting salah
• Debit diposting pada kredit atau sebaliknya
• Tidak diposting

60
2-60
 Koreksi Kesalahan

Kesalahan
Error ProsedurProcedure
Correction Koreksi
1. Ayat jurnal salah tetapi belum Gambar garis pada error tersebut
diposting. dan masukkan ayat jurnal atau
jumlah yang benar.
Error
Kesalahan Correction Procedure
Prosedur Koreksi

2. Ayat jurnal benar tetapi Gambar garis pada posting yang

salah diposting. salah dan posting lagi yang benar.

Kesalahan Prosedur Koreksi

3. Ayat jurnal salah dan telah Buat jurnal dan posting koreksi
diposting dengan benar.
61
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 Contoh Koreksi Kesalahan

Pada 5 Mei, pembelian peralatan kantor dengan

kredit salah dijurnal dan telah diposting seperti
yang ditampilkan.

Jurnal – Seperti yang dicatat dan diposting

Tgl Keterangan Debit Kredit
Mei 5 Perlengkapan 12,500
Utang Dagang 12,500

Bagaimana ayat jurnal koreksi

yang dibutuhkan?

62
2-62
 Contoh Koreksi Kesalahan

Pada 5 Mei, pembelian peralatan kantor dengan

kredit salah dijurnal dan telah diposting seperti
yang ditampilkan.

Jurnal – Seperti yang dicatat dan diposting

Tgl Keterangan Debit Kredit
Mei 5 Perlengkapan 12,500
Utang Dagang 12,500

Tgl Keterangan Debit Kredit

Mei 5 Peralatan Kantor 12,500
Perlengkapan 12,500
63
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 Currency Signs and Underlining

Currency Signs
 Do not appear in journals or ledgers.
 Typically used only in the trial balance and the financial
statements.
 Shown only for the first item in the column and for the total
of that column.

Underlining
 A single line is placed under the column of figures to be
added or subtracted.
 Totals are double-underlined.
2-64 LO 7
 INVESTOR INSIGHT Why Accuracy Matters

Recently, the German Finance minister, Wolfgang Schauble,

said that ―statistical and communication problems‖ were to
blame for a €55.5 billion error in the accounts of nationalized
property lender Hypo Real Estate Holding (DEU). Mr.
Schauble referred to the error as ―an annoying mistake.‖ This
seems to be a considerable understatement considering that the
error represented 2.6% of the German gross domestic product.
Since the bank had been previously taken over by the German
government, the error had resulted in an overstatement of the
federal debt of €55.5 billion.)
How could this error have occurred?

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 > DO IT!

2-66 LO 7
2-67 LO 7
 A Look at U.S. GAAP Learning
Objective 8
Compare the
Key Points procedures for the
accounting process
● Both the IASB and FASB go beyond the basic under IFRS and U.S.
definitions provided in this textbook for the key GAAP.
elements of financial statements, that is, assets, liabilities, equity, revenues,
and expenses.
● In deciding whether the United States should adopt IFRS, some of the issues
the U.S. Securities and Exchange Commission (SEC) said should be
considered are:
♦ Whether IFRS is sufficiently developed and consistent in application.
♦ Whether the IASB is sufficiently independent.
♦ Whether IFRS is established for the benefit of investors.
♦ The issues involved in educating investors about IFRS.
♦ The impact of a switch to IFRS on U.S. laws and regulations.
♦ The impact on companies including changes to their accounting systems,
contractual arrangements, corporate governance, and litigation.
♦ The issues involved in educating accountants, so they can prepare
statements under IFRS.
2-68 LO 8
 A Look at U.S. GAAP
Similarities
● A trial balance under GAAP follows the same format as shown in the
textbook.
● As shown in the textbook, currency signs are typically used only in the trial
balance and the financial statements. The same practice is followed under
GAAP, using the U.S. dollar.
Differences
● In the United States, equity is often referred to as either shareholders’
equity or stockholders’ equity, and Share Capital—Ordinary is referred to
as Common Stock. The statement of financial position is often called the
balance sheet in the United States.
● Rules for accounting for specific events sometimes differ across countries.
For example, IFRS companies rely less on historical cost and more on fair
value than U.S. companies. Despite the differences, the double-entry
accounting system is the basis of accounting systems worldwide.
2-69 LO 8
 A Look at U.S. GAAP
Looking to the Future
The basic recording process shown in this textbook is followed by companies
across the globe. It is unlikely to change in the future. The definitional
structure of assets, liabilities, equity, revenues, and expenses may change
over time as the IASB and FASB evaluate their overall conceptual framework
for establishing accounting standards.

2-70 LO 8
 A Look at U.S. GAAP
A Look at IFRS
IFRS Self-Test Questions
Which statement is correct regarding GAAP?

a) GAAP reverses the rules of debits and credits, that is,

debits are on the right and credits are on the left.

b) GAAP uses the same process for recording transactions as

IFRS.

c) The chart of accounts under GAAP is different because

revenues follow assets.

d) None of the above statements are correct.

2-71 LO 8
 A Look at U.S. GAAP
A Look at IFRS
IFRS Self-Test Questions
A trial balance:

a) is the same under GAAP and IFRS.

b) proves that transactions are recorded correctly.

c) proves that all transactions have been recorded.

d) will not balance if a correct journal entry is posted twice.

2-72 LO 8
 A Look at U.S. GAAP
A Look at IFRS
IFRS Self-Test Questions
One difference between GAAP and IFRS is that:

a) IFRS uses accrual-accounting concepts, and GAAP uses

primarily the cash basis of accounting.

b) GAAP uses a different posting process than IFRS.

c) IFRS uses more fair value measurements than GAAP.

d) the limitations of a trial balance are different between GAAP

and IFRS.

2-73 LO 8
 Copyright

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2-74