1.  Business Accounting
Chapter 6

2. keep accounting records in order
The Accounting Cycle
keep accounting records in order
Collect & verify source documents
Analyze each transaction
Journalize each transaction

3. evidence transaction occurred
Source Documents
evidence transaction occurred
used by accounting clerks to keep accounting records

4. Verify accuracy and completeness:
does it foot (add up) correctly
is it a valid document
did transaction take place
is all necessary info present

5. Source Documents: invoice sales slip receipt check stub
buying item on account
sales slip
selling item on account
receipt
record of cash received
check stub
record of cash payment

6. More Source Documents:
memorandum
used if no other source document exists
internal transactions
other bills
identifies expenses incurred
payroll register
cash register tape

7. Analyzing Business Transactions
Review source document to determine which accounts to debit and credit and for what amount

8. Recording Transactions in a Journal
chronological record of transactions
Journalizing
process of recording transactions in journal
journal is only place where complete details of transaction are recorded

9. Accounting Period (fiscal period)
period of time for which accounting information is presented
day, week, month (internal reporting);
quarter, year (internal and external)

10. most businesses report to the public on an annual (yearly)basis

11.  a fiscal year is an accounting period of twelve months
if that year begins on January 1st it is called a calendar year

12.  corporations are required to report quarterly to the government (SEC) 

13. The General Journal General Journal => most common journal
many different types of transactions can be recorded here

14. Information included in a journal entry:
date of transaction
title of the debit account
amount of the debit
title of the credit account
amount of the credit
reference to the source document and/or an explanation
A B C
D F E

15. Journalizing Business Transactions
Use T accounts and the six-step method to analyze business transactions and determine the debit and credit parts of each journal entry.

16. Six-Step Method Which accounts are affected?
What is the classification of each account?
Is each account increases or decreased?
Which account is debited and for what amount?
Which account is credited and for what amount?
What is the complete entry?

17. Source Documents used as clues:
check or check stub = credit to cash in bank
receipt = debit to cash in bank
sales slip = credit to fees or sales and debit to A/R
invoice = credit to A/P

18. -Juanita Ortiz invested $25,000 to start business on October 1, 2009.
Example:
-Juanita Ortiz invested $25,000 to start business on October 1, 2009.
-Business issued check # 1001 for $2,000 to buy office furniture from Wicks on October 2.

19. Pen or Pencil
in business all official accounting records must be recorded in ink
in class we will always use pencil (you are expected to make lots of mistakes and learn from them, therefore plan on using your eraser frequently).

20. Correcting Errors
in business: if discover error in journal before posting, then cross out mistake and write in the correction
never erase or cover up a mistake with whiteout ; this will look suspicious
in class: we will erase and correct our mistakes in order to keep things looking neat and legible