Horngren IFA 11e Ch03

Introduction to Financial
Accounting
Horngren | Sundem | Elliott | Philbrick

Recording Transactions

11e

Chapter 3

Learning Objectives
Use double-entry accounting
2. Describe the five steps in the recording process
3. Analyze and journalize transactions and post journal entries to the ledgers
4. Prepare and use a trial balance
1.

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall.

3-2

Learning Objectives
Close revenue and expense accounts and update retained earnings 6. Correct erroneous journal entries and describe how errors affect accounts 7. Explain how computers have transformed the processing of accounting data
5.

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall.

3-3

Learning Objective 1

Use Double-Entry Accounting

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall.

The Double-Entry
Accounting System

LO-1

Method followed for recording transactions, whereby every transaction affects at least two accounts
 Accountants analyze each transaction to determine:


 Which accounts it affects
 Whether to increase or decrease the balances  How much each balance will change
Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall.

3-5

The Double-Entry
Accounting System


LO-1

Transactions are recorded in:
 General Journal: Chronological record of an organization’s transactions and how each transaction affects the balances in particular accounts
 General Ledger: Collection of all ledger accounts that supports an organization’s financial statements
 Ledger account: Listing of all the increases and decreases in a particular account Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall.

3-6

General Ledger: TAccount
Device used to portray individual ledger accounts in the general ledger  Each T-account takes the form of the capital letter T and represents an individual ledger account
 Transactions affecting a particular ledger account are accumulated
here