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PowerPoint Authors:Susan Coomer Galbreath, Ph.D., CPACharles W. Caldwell, D.B.A., CMAJon A. Booker, Ph.D., CPA, CIACynthia J. Rooney, Ph.D., CPA
The ledger is a collection of all accounts for anThe ledger is a collection of all accounts for aninformation system. A company’s size and diversityinformation system. A company’s size and diversityof operations affect the number of accounts needed.of operations affect the number of accounts needed.
The ledger is a collection of all accounts for anThe ledger is a collection of all accounts for aninformation system. A company’s size and diversityinformation system. A company’s size and diversityof operations affect the number of accounts needed.of operations affect the number of accounts needed.
The chart of accounts is a list of all accounts and includes anidentifying number for each account.
The chart of accounts is a list of all accounts and includes anidentifying number for each account.
Account Number Account Name Account Number Account Name101 Cash 302 C. Taylor, Withdrawals106 Accounts receivable 403 Revenues126 Supplies 406 Rental revenue128 Prepaid insurance 622 Salaries expense167 Equipment 637 Insurance expense201 Accounts payable 640 Rent expense236 Unearned revenue 652 Supplies expense301 C. Taylor, Capital 690 Utilities expense
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DEBITS AND CREDITS
A T-account represents a ledger account and A T-account represents a ledger account and is a tool used to understand the effects of is a tool used to understand the effects of
one or more transactions. one or more transactions.
LiabilitiesAccounts payable 6,200$ Unearned revenue 3,000 Total liabilities 9,200
Equity
C. Taylor, Capital 33,270$ Total equity 33,270 Total liabilities and equity 42,470$
FASTFORWARDBalance Sheet
December 31, 2011
ConnectionsConnections
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C. Taylor, Capital 12/1/11 -$
Net income for December 3,470
Plus: Investments by Owner 30,000
33,470
Less: Owner Withdrawals 200
C. Taylor, Capital, 12/31/11 33,270$
Statement of Owner's Equity For the Month Ended December 31, 2011
FASTFORWARD
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PRESENTATION ISSUES
1. Dollar signs are not used in journals and ledgers.2. Dollar signs appear in financial statements and other
reports such as trial balances. The usual practice is to put dollar signs beside only the first and last numbers in a column.
3. When amounts are entered in the journal, ledger, or trial balance, commas are optional to indicate thousands, millions, and so forth.
4. Commas are always used in financial statements.5. Companies commonly round amounts in reports to the
nearest dollar, or even to a higher level.
1. Dollar signs are not used in journals and ledgers.2. Dollar signs appear in financial statements and other
reports such as trial balances. The usual practice is to put dollar signs beside only the first and last numbers in a column.
3. When amounts are entered in the journal, ledger, or trial balance, commas are optional to indicate thousands, millions, and so forth.
4. Commas are always used in financial statements.5. Companies commonly round amounts in reports to the
nearest dollar, or even to a higher level.
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GLOBAL VIEWBoth U.S. GAAP and IFRS prepare the same four basic financial statements. A few differences are found within each statement, but over time these differences are likely to be eliminated. Here is a typical IFRS balance sheet presentation:
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ACCOUNTING CONTROLS AND ASSURANCE
Accounting systems depend on control procedures that assure the proper principles were applied in processing accounting information. The passage of SOX legislation strengthened U.S. control procedures in recent years.
Accounting systems depend on control procedures that assure the proper principles were applied in processing accounting information. The passage of SOX legislation strengthened U.S. control procedures in recent years.
The percentage of employees in information technology that report observing specific types of misconduct in 2009.
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Debt Ratio
Evaluates the level of debt risk.
A higher ratio indicates that there is a greater probability that a company will
not be able to pay it’s debt in the future.
A higher ratio indicates that there is a greater probability that a company will