accounting
2-1
BU8101
Accounting: A User Perspective
Lecture 2
The Accounting Cycle
Wednesday, 17 August 2011
Mrs. Ho Yin Kheng
S3-01C-88
Nanyang Business School
Nanyang Technological University
Email: yklau@ntu.edu.sg
Tel: 67905694
2-2
LO 2
Lecture Outline
1. Analyzing Business Transactions
2. Recording Process
a.
b.
c.
d.
e.
f.
The Source Document
The journal
The accounts
Debit and Credit rule
Recording process illustrated
Unadjusted trial balance
3. Adjusting entries
a.
b.
c.
d.
Deferrals
Accruals
Accounting estimates
Adjusted trial balance
4. Prepare financial statements and close books
2-3
Suggested Readings
Compulsory
Lecture notes
Chapters 3, 4 & 5 (learning objectives 1 to 6) of Financial and Managerial Accounting: The Basis For Business
Decisions by Williams, J.R., Hakka, S.F. and Bettner,
M.S.(16th edition).
Reference
Chapter 2 & 3 of Cornerstones of Financial & Management
Accounting – Current Trends by Rich, J.S., Jones, J.P.,
Mowen, M.M., Hansen, D.R. and Heitger, D.L.
LO 1
Analyzing Business Transactions
Measurement and Ethical Issues
2-4
Business transactions are economic events that affect a company’s financial position.
Three measurement issues must be resolved before a business transaction is recorded.
Recognition issue—When should the transaction be recorded?
For e.g. A sale is recognized when title passes to the buyer, regardless of when payment is received (recognition point).
Valuation issue—What dollar amount should be recorded? At the exchange price (historical cost) unless there is evidence that the fair value has changed and adjustments must be made.
Classification issue—Which accounts are affected?
2-5
LO 2
Analyzing and Recording Process
Analyze each transaction and event from source documents
Record relevant transactions and events in a journal
Posted to individual accounts in the Ledger
BU8101
Accounting: A User Perspective
Lecture 2
The Accounting Cycle
Wednesday, 17 August 2011
Mrs. Ho Yin Kheng
S3-01C-88
Nanyang Business School
Nanyang Technological University
Email: yklau@ntu.edu.sg
Tel: 67905694
2-2
LO 2
Lecture Outline
1. Analyzing Business Transactions
2. Recording Process
a.
b.
c.
d.
e.
f.
The Source Document
The journal
The accounts
Debit and Credit rule
Recording process illustrated
Unadjusted trial balance
3. Adjusting entries
a.
b.
c.
d.
Deferrals
Accruals
Accounting estimates
Adjusted trial balance
4. Prepare financial statements and close books
2-3
Suggested Readings
Compulsory
Lecture notes
Chapters 3, 4 & 5 (learning objectives 1 to 6) of Financial and Managerial Accounting: The Basis For Business
Decisions by Williams, J.R., Hakka, S.F. and Bettner,
M.S.(16th edition).
Reference
Chapter 2 & 3 of Cornerstones of Financial & Management
Accounting – Current Trends by Rich, J.S., Jones, J.P.,
Mowen, M.M., Hansen, D.R. and Heitger, D.L.
LO 1
Analyzing Business Transactions
Measurement and Ethical Issues
2-4
Business transactions are economic events that affect a company’s financial position.
Three measurement issues must be resolved before a business transaction is recorded.
Recognition issue—When should the transaction be recorded?
For e.g. A sale is recognized when title passes to the buyer, regardless of when payment is received (recognition point).
Valuation issue—What dollar amount should be recorded? At the exchange price (historical cost) unless there is evidence that the fair value has changed and adjustments must be made.
Classification issue—Which accounts are affected?
2-5
LO 2
Analyzing and Recording Process
Analyze each transaction and event from source documents
Record relevant transactions and events in a journal
Posted to individual accounts in the Ledger