Accounting Process

ACCOUNTING PROCESS
TRANSACTION CYCLE
ACCOUNTING INFORMATION SYSTEM
Process
Input Double Entry Output
Source Documents Bookkeeping Financial Statements
Process
Input Output
Double Entry Bookkeeping
Source Documents Financial Statements
Source Documents Transaction Cycle

Official Receipt, Sales Invoice, Delivery Receipt Revenue-Receipt Cycle
Official Receipt, Purchase Invoice, Delivery Purchase-Disbursement Cycle
Receipt
Certificate of Shares of Stocks, Capital Investment Cycle
Time Cards, pay slips, Bank transfers Payroll Cycle
Process
Input Output

Assets= Equities Debits=Credits
Assets= Liabilities + Capital Debits=Credits
Assets = Liabilities and Capital
Debits = Credits
Normal balance of Assets Normal Balance of Equities
Debits= increase Credits= increase
ACCOUNTING PROCESS
DOUBLE ENTRY BOOKKEEPING
Debits = Credits
Account Title Increase

Cash
Owner, Capital
Office Supplies
Accounts Receivable
Land
Accounts Payable
ACCOUNTING PROCESS
DOUBLE ENTRY BOOKKEEPING
Debits = Credits
Account Title Decrease

Cash
Owner, Capital
Office Supplies
Accounts Receivable
Land
Accounts Payable
Assets Liabilities Capital Analysis (1)
1 Owner invest Cash
2 Purchased supplies on credit
3 Owner invest equipment
4 Buys land paying cash
5 Borrows cash with note

6 Rendered services for cash
7 Paid utilities expense
8 Paid supplies purchased
9 Rendered services on account
10 Collection of Accounts
11 Paid salaries of employees
12 Cash withdrawal of the owner
13 Payment of accounts payable
14 Purchased office tables and chairs, paid
downpayment and balance due after 30
days
Assets Liabilities Capital Analysis
1 Owner invest Cash x x Cash- Owner,Capital
2 Purchased supplies on credit x x Supplies-Accounts Payable
3 Owner invest equipment x x Equipment- Owner,Capital
4 Buys land paying cash x, x Land- Cash
5 Borrows cash with note x x Cash-Notes Payable

6 Rendered services for cash x x Cash-Capital(revenue)
7 Paid utilities expense x x Cash-Capital (expense)
8 Paid supplies purchased x x Cash-Accounts Payable
9 Rendered services on account x x Receivable-Capital(revenue)
10 Collection of Accounts x,x Cash-Accounts Receivable

11 Paid salaries of employees x x Cash-Capital(expense)
12 Cash withdrawal of the owner x x Cash-Capital(drawing)
13 Payment of accounts payable x x Cash-Accounts Payable
14 Purchased office tables and chairs, paid x,x x Furniture and Fixture-Cash-
downpayment and balance due after 30 Accounts Payable
days
1 Owner invest Cash increase increase Cash- Owner,Capital
2 Purchased supplies on credit increase increase Supplies-Accounts Payable
3 Owner invest equipment increase increase Equipment- Owner,Capital
4 Buys land paying cash Increase/decrease Land- Cash
5 Borrows cash with note increase increase Cash-Notes Payable

6 Rendered services for cash increase Increase in capital Cash-Capital(revenue)
(increase in revenue)
7 Paid utilities expense decrease decrease in capital Cash-Capital (expense)
(Increase in expense)
8 Paid supplies purchased decrease decrease Cash-Accounts Payable
9 Rendered services on account increase Increase in capital Receivable-Capital(revenue)

(Increase in
Revenue)
10 Collection of Accounts Increase/decrease Cash-Accounts Receivable

11 Paid salaries of employees decrease decrease in capital Cash-Capital(expense)
(Increase in expense)
12 Cash withdrawal of the owner decrease Decrease in capital Cash-Capital(drawing)

(increase in drawing)
13 Payment of accounts payable decrease decrease Cash-Accounts Payable
14 Purchased office tables and chairs, paid Increase/decrease increase Furniture and Fixture-Cash-
days
1 Owner invest Cash debit credit Cash- Owner,Capital
2 Purchased supplies on credit debit credit Supplies-Accounts Payable
3 Owner invest equipment debit credit Equipment- Owner,Capital
4 Buys land paying cash Debit/credit Land- Cash
5 Borrows cash with note debit credit Cash-Notes Payable

6 Rendered services for cash debit Credit Cash-Capital(revenue)
7 Paid utilities expense credit Debit- Expense Cash-Capital (expense)
8 Paid supplies purchased Credit/debit Cash-Accounts Payable
9 Rendered services on account debit Credit -revenue Receivable-Capital(revenue)
10 Collection of Accounts Debit/credit Cash-Accounts Receivable

11 Paid salaries of employees credit Debit-Expense Cash-Capital(expense)
12 Cash withdrawal of the owner credit Debit- Cash-Capital(drawing)
Owner,Drawing
13 Payment of accounts payable credit debit Cash-Accounts Payable
14 Purchased office tables and chairs, paid Debit/credit credit Furniture and Fixture-Cash-
days
Process
Input Output
ACCOUNTING PROCESS
1 Analyzing Business Transactions
2 Recording Transactions in the “Book of Original Entry” or Journalizing
3 Posting Transactions in the “Book of Final Entry” or Posting
4 Preparation of Trial Balance
5 Journalizing and posting ADJUSTING ENTRIES
6 Preparation of Financial Statements
7 Post-Closing Trial Balance
8 Reversing Entries
ACCOUNTING PROCESS
• STEP 1- ANALYZING BUSINESS TRANSACTIONS

Accounting Process

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Accounting Process

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ACCOUNTING PROCESS

Source Documents Transaction Cycle

Double Entry Bookkeeping

Account Title Increase

Account Title Decrease

4 Buys land paying cash

5 Borrows cash with note

8 Paid supplies purchased

9 Rendered services on account

4 Buys land paying cash x, x Land- Cash

5 Borrows cash with note x x Cash-Notes Payable

8 Paid supplies purchased x x Cash-Accounts Payable

9 Rendered services on account x x Receivable-Capital(revenue)

10 Collection of Accounts x,x Cash-Accounts Receivable

4 Buys land paying cash Increase/decrease Land- Cash

5 Borrows cash with note increase increase Cash-Notes Payable

9 Rendered services on account increase Increase in capital Receivable-Capital(revenue)

10 Collection of Accounts Increase/decrease Cash-Accounts Receivable

12 Cash withdrawal of the owner decrease Decrease in capital Cash-Capital(drawing)

4 Buys land paying cash Debit/credit Land- Cash

5 Borrows cash with note debit credit Cash-Notes Payable

8 Paid supplies purchased Credit/debit Cash-Accounts Payable

9 Rendered services on account debit Credit -revenue Receivable-Capital(revenue)

10 Collection of Accounts Debit/credit Cash-Accounts Receivable

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