Recording Process in Financial Accounting (Grade A)

Summary:

In Chapter 2 of the Financial Accounting course (BACC200), the focus is on the recording process. The chapter begins by introducing the concept of debit balance accounts and credit balance accounts, which are essential in maintaining the balance of the accounting equation. Internal and external transactions are explained, emphasizing the need to record every transaction. The double-entry system is introduced as the method used to record transactions, with each debit account requiring a corresponding credit account to ensure balance.

The chapter then delves into the double-entry system, highlighting that debits are recorded on the left side, while credits are recorded on the right side in the T-account form. Various accounts are presented, including assets, liabilities, owner’s equity, revenue, expenses, and drawings. The normal balance for each account type is discussed.

The chapter concludes by outlining the basic accounting cycle, which includes steps such as analyzing business transactions, journalizing transactions, posting to ledger accounts, preparing a trial balance, journalizing and posting adjusting entries, preparing an adjusted trial balance, preparing financial statements, journalizing and posting closing entries, and preparing a post-closing trial balance.

Overall, this chapter provides a comprehensive overview of the recording process in financial accounting, emphasizing the importance of debit and credit balance accounts and guiding students through the steps of the accounting cycle.

Excerpt:

Recording Process in Financial Accounting

Objective:
• Debit balance accounts and Credit balance accounts

2.1 Business Transactions
LEARNING
OBJECTIVE 1 Debit Balance Accounts & Credit Balance Accounts

• Internal Transactions: these are transactions that take place within the company such as the use of supplies as an internal transaction
• External Transactions: these are transactions that occur between the company and the outside, such as buying a computer or buying a car
• Every transaction, whether internal or
  external, must be recorded

2.2 what is the Double Entry System

• The double-entry system is the process used in recording transaction
• For every debit account, there must be a credit account to keep the basic accounting equation in balance