CH2

Download as pdf or txt
Download as pdf or txt
You are on page 1of 44

The Account

• Accounts (會計科目、帳戶) contain a record of increases


and decreases of asset, liability and equity items. The
accountant would represent the account graphically using a
T account (T字帳)。
2-3
Title of Account
Debit Credit • The layout of a T-account contains
借方 貸方 three parts :
Debit Credit  the Title of the account
balance balance ‚ a left (左邊) or Debit side (Dr.)
借方 貸方
餘額 餘額 ƒ a right (右邊) or Credit side (Cr.)

2
Double-Entry System
• Double-entry accounting (複式簿記) demands the
accounting equation remain in balance, which means
that for each transaction:
 At least two accounts are involved, with at least one
debit and one credit (兩個以上之帳戶,至少一個借方一
個貸方).
‚DEBITS must equal CREDITS. The total amount
debited must equal the total amount credited.
Transaction Accounts Debit and credit

Company pays $100 ➊ Supplies Dr. Supplies 100


cash for supplies. ➋ Cash Cr. Cash 100

The sum of the debits for all entries must equal the sum
of the credits for all entries. 3
Debits and Credits
Account Title Right
Left
Side Side
Debit Credit

正常餘額在左邊 正常餘額在右邊
Left side is Net increases or decreases on
Right side is the normal
the normal one side have equal net balance side for
balance side
effects on the other side. liabilities and equity. 4
for assets
Debits and Credits

2-4
Debits Credits
Increase assets Decrease assets

Decrease liabilities Increase liabilities

Assets Liabilities
Debit for Credit for Debit for Credit for
increase decrease decrease increase
Normal Normal
balance balance
Debits should Credits should
exceed credits exceed debits 5
Debits and Credits

Assets
Cash
Œ Owner invests $700 in cash in Dr. Debit Cr.
Credit
exchange for common stock.
 Company pays $100 cash for Œ 700  100
supplies. Ž 300  400
Ž Company provides service and
collect $300 cash. Bal. 500

 Company pays $400 cash for


dividends.
If Debits are greater than
Credits, the account will have
a debit balance.

6
Debits and Credits
Liabilities

Accounts Payable
Œ Company purchases $800 of Dr. Debit Cr.
Credit
supplies on credit from a supplier.
 Company pays supplier $500  500 Œ 800
toward the payable of the last
transaction. Bal. 300

If Credits are greater than


Debits, the account will have a
credit balance.

7
Debits and Credits

Debits Credits
Decrease Equity Increase Equity

Share Capital-Ordinary Retained Earnings


Debit for Credit for Debit for Credit for
decrease increase decrease increase
Normal Normal
balance balance

8
Debits and Credits

Dividends
Debit for Credit for
increase decrease
Normal
balance

9
Debits and Credits
Equity

Share Capital
Œ Owner invests $700 in cash in Dr. Debit Cr.
Credit
exchange for ordinary shares.
Œ 700

Bal. 700

 Company pays $100 cash for


Dividends
dividends. Dr. Debit Credit Cr.

 100
Bal. 100

10
Debits and Credits

Debits Credits
Decrease revenue Increase revenue

Increase expenses Decrease expenses

Expense Revenue
Debit for Credit for Debit for Credit for
increase decrease decrease increase
Normal Normal
balance balance
11
Debits and Credits
Equity

Consulting Revenue
Œ Company provides consulting Dr. Debit Cr.
Credit
services and receives $1,000
from client. Œ 1,000

Bal. 1,000

Utilities Expense
 Company pays $300 cash for Dr. Debit Cr.
Credit
January utilities expense.
 300
Bal. 300

12
Debits and Credits
2-7

Debit

Credit

13
EXERCISE

Œ 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.

 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.
14
EXERCISE

Identify debit or credit for each of the following accounts.


a. To increase Land
b. To decrease Cash
c. To increase Fees Earned (Revenues)
d. To increase Office Expense
e. To decrease Unearned Revenue
f. To decrease Prepaid Rent
g. To increase Notes Payable
h. To decrease Accounts Receivable
i. To increase Share Capital

15
Equity Relationships
2-6

16
The Recording Process

1
2-7
Analyze each
transaction and event
from source
documents (原始憑證)

2
4
Record relevant
transactions and
Prepare and
events in a journal
analyze the trial
(日記簿)
balance (試算表)
3
Post (過帳) journal
information to ledger
(分類帳) accounts
17
Journalizing
• Journalizing (分錄) is the process of entering transaction
data in the journal.
• There are three things you need to know in order to be
able to record a journal entry:
➊ What accounts and what type The company pays
of account that are affected? $2,500 cash for supplies.
➊ Cash (Assets)
➋ Whether the account increases
Supplies (Assets)
or decreases?
➋ Cash (Decrease)
➌ What is the dollar amount? Supplies (Increase)
➌ $2,500

18
Journalizing
• A journal entry includes following information about each
transaction.
On 9/1, shareholders’ invested €15,000 cash in the corporation in
exchange for share of stock, and Softbyte purchased computer
equipment for €7,000 cash.
2-8

交易日期 記入貸方科目及金額於次一行,首字後移
記入借方科目及金額 交易事項摘要 類頁 (Reference)
19
Transaction Analysis

On July 1, Butler Shipping purchases a delivery truck costing


£420,000. It pays £240,000 cash now and agrees to pay the
remaining £180,000 on account.

20
The Ledger
• General Ledger (總分類帳) contains the entire group of
accounts maintained by a company.

21
Posting
• Posting (過帳)- Recording process accumulates the effects
of journalized transactions in the individual accounts.
2-12

過入借方帳戶
將借方帳戶編號記
入日記簿之類頁欄
過入貸方帳戶
將貸方帳戶編號記
入日記簿之類頁欄

22
Chart of Accounts

會計科目表

23
The Recording Process Illustrated
2-14

24
The Recording Process Illustrated

25
The Recording Process Illustrated

26
The Recording Process Illustrated

27
The Recording Process Illustrated

28
The Recording Process Illustrated

29
The Recording Process Illustrated

30
The Recording Process Illustrated

31
The Recording Process Illustrated

32
The Recording Process Illustrated

33
34
35
EXERCISE

Prepare general journal entries for the following transactions.


8/1 Madison Harris, the owner, received shares by investing
$6,500 cash and $33,500 of photography equipment.
8/1 Cash 6,500
Equipment 33,500
Share Capital 40,000

8/2 The company paid $2,100 cash for an insurance policy


covering the next 24 months.
8/5 The company purchased office supplies for $880 cash.
8/20 The company received $3,331 cash in photography fees
earned.
8/31 The company paid $675 cash for August utilities.
36
8/2

8/5

8/20

8/31

37
EXERCISE

Using information from the journal entries to prepare T-accounts.


Cash Photography Equipment

Share Capital

Office Supplies
Photography Fees Earned

Prepaid Insurance Utilities Expense

38
Trial Balance
• A trial balance (試算表) is a list of all ledger
accounts and their balances (either debit or credit)
at a point in time.
➀ The trial balance proves the mathematical
equality of debits and credits after posting.
➁ A trial balance may also uncover errors in
journalizing and posting.
➂ A trial balance is useful in the preparation of
financial statements.

39
Trial Balance
• Preparing a trial balance involves three steps:
 List each account title and its amount (from ledger)
in the trial balance.
‚ Compute the total of debit balances and the total of
credit balances.
ƒ Verify (prove) total debit balances equal total credit
balances.

40
The Trial Balance
2-21

41
Trial Balance
• Equality of debit and credit totals in a trial balance
does not guarantee that no errors were made. There
are limitations of a trial balance:
➀ A transaction is not journalized.
➁ A correct journal entry is not posted.
➂ A journal entry is posted twice.
➃ Incorrect accounts are used in journalizing and
posting.

42
EXERCISE 2.12

The T-accounts below summarize the ledger of Negrete


Landscaping at the end of the first month of operations.

Prepare a trial balance at April 30, 2020.


43
44

You might also like