cho2.ppt

chapter2 Chart of Accounts for Netsolutions 1.Assets 11 Cash 12 Accounts Receivable(P44) 14 Supplies 15 Prepaid Insurance 17 Land 18 Office Equipment 2.Liabilities 21 Accounts Payable 22 Unearned Rent (P42) 3.Owners Equity 31 Chris Clark, Capital 32 Chris Clark , Drawing Journal is a record in which the transaction is initially entered. The process of recording a transaction in the journal is called journalizing. The form of recording a transaction is called a journal entry. We can find that, regardless of the number of accounts, the sum of the debits is always equal to the sum of the credits in a journal entry. The system like these is known as double-entry accounting. Flow of Business Transactions 1. Failure to record a transaction or to post a transaction. 2. Recording the same erroneous amount for both the debit and the credit parts of a transaction. 3. Recording the same transaction more than once. 4. Posting a part of a transaction correctly as a debit or credit but to the wrong account. Account Ledger Assets Liabilities Owner’s Equity Chart of Accounts Revenues Expenses Drawing Balance of the Account Debits Credits T Account Double-Entry Accounting Journal Entry Journal Journalizing Posting Two-Column Journal Unearned Revenue Trial Balance Dec. 31 NetSolutions paid its $225 electric bill for the month. Post. Ref. JOURNAL Date Description Debit Credit Page 4 1 2 3 4 Dec. 31 2005 Utilities Expense 225 00 Cash 225 00 Paid utility bill. 54 11 Dec. 31 NetSolutions received $2,870 from fees earned for the second half of December. 5 6 7 8 31 Cash 2 870 00 Fees Earned 2 870 00 Received fees from customers. 11 41 Dec. 31 NetSolutions earned $1,120 on account for the second half of December. 9 10 11 12 31 Accounts Receivable 1 120 00 Fees Earned 1 120 00 Recorded fees earned on account. 12 41 Dec. 31 Chris Clark withdrew $2,000 for personal use.