Guidelines for preparing financial Statements–READ AND DO:

  1. Standard formats should be used.
  2. Headings should be used on all statements.
  3. Single underline should be used to add or subtract numbers above the line; double underlines indicate a total.
  4. Dollar signs are used at the top of columns and beneath single (subtotal) underlines.
  5. Expenses may be listed from highest to lowest dollar amount.
  6. Assets are listed from most liquid to least liquid.
  7. Liabilities are listed from most current to the least current.

 

Chapter 2

Analyzing Transactions: The Accounting Equation

 Learning Objectives

  • LO1    Define the accounting elements.
  • LO2    Construct the accounting equation.
  • LO3    Analyze business transactions.
  • LO4    Show the effects of business transactions on the accounting equation.
  • LO5    Prepare and describe the purposes of a simple income statement, statement of owner’s equity, and balance sheet.
  • LO6    Define the three basic phases of the accounting process.

LO6

Overview of the Accounting Process (See Figure 2-4) & WATCH THIS VIDEO

  1. Input. Business transactions provide the necessary information for input.
  2. Processing. Identifying, classifying, and determining how accounts are increased or decreased in business transactions.
  3. Output. Recording the processed information on financial statements.

Homework: 

  1. In-Class Exercise: Complete Exercises E2-5A with a partner. We will check them together.
  2. Homework: Study Guide Review Questions 16, 17, 18, 19; Study Guide Exercises 3, 9, 10, 11; Study Guide Problems 14, 15, 16, 17