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## Acct 310 Accounting Review Part I

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Title: Acct 310 Accounting Review Part I

1
Acct 310 Accounting ReviewPart I
• Rick Hayes, Ph.D., CPA
• California State University L.A.

2
Accounting Analysis...
Analyze the effect of business transactions on
the basic accounting equation
Assets Liabilities Stockholders Equity
Must always balance.
3
Transaction Analysis
• Two or more items can be affected
• Example purchase computer for 10,000 by paying
6,000 in cash and signing a note for 4,000

4
Event 1 Investment of Cash by Stockholders
Oct. 1 - Owner invested 10,000 Cash in business
in exchange for 10,000 of Sierra Corporation
Common Stock
5
Event 2 Note Issued in Exchange for Cash
Oct. 1 Sierra issued a 3-month, 12, 5,000
Note Payable to Castle Bank in exchange for cash.
6
Event 3 Purchase of Office Equipment for Cash
Oct. 2 Sierra acquired office equipment by
paying 5,000 cash to Superior Sales Co.
7
Event 4 Receipt of Cash in Advance from Customer
from R. Knox, a client.
8
Event 5 Services Rendered for Cash
Oct. 3 Sierra received 10,000 in cash from
Copa Co. for advertising services performed
9
Event 5 Services Rendered, WHAT IF these were
performed on account?
Later, when 10,000 is collected from customer
10
(No Transcript)
11
Examples
12
Total the Entries to Each Side
If the greater sum is on the left, the account
has a Debit Balance
13
Total the Entries to Each Side
If the greater sum is on the right, the account
has a Credit Balance
14
Summary of Transactions
Assets
Liabilities Equity
15
Normal Balances for Assets and Liabilities
16
Normal Balances for Stockholders Equity
17
Normal Balances for Expenses and Revenues
18
Expansion of Basic Equation
19
Review
What is the normal balance for the following
accounts?
Cash
Debit
Credit
Accounts Payable
Accounts Receivable
Debit
Service Revenue
Credit
Common Stock
Credit
Salaries Expense
Debit
20
Review
What is the normal balance for the following
accounts?
Dividends
Debit
Debit
Building
Taxes Payable
Credit
Unearned Revenus
Credit
Prepaid Insurance
Debit
Rent Expense
Debit
21
Date
Debit Credit
1 Cash

5,000
Notes Payable

5,000 (Issued
3-month, 12 note payable for cash)

2 Office Equipment

5,000
Cash

5,000 (Purchased
office equipment for cash)

22
The General Ledger
23
The General Ledger
24
Posting Entries
GENERAL JOURNAL
Account Titles and Explanations
2007

Oct. 1 Cash

10,000
Common Stock

10,000
Balance
debit
credit
debit
credit
ref
Account COMMON STOCK
Acct 3010
Date
Balance
debit
credit
debit
credit
ref
25
Posting Entries
GENERAL JOURNAL
Account Titles and Explanations
2007

Oct. 1 Cash

10,000
Common Stock

10,000
Balance
debit
credit
debit
credit
ref
gj 1
Oct 1
10,000
10,000
Account COMMON STOCK
Acct 3010
Date
Balance
debit
credit
debit
credit
ref
Oct 1
gj 1
10,000
10,000
26
Posting Entries
GENERAL JOURNAL
Account Titles and Explanations
2007

Oct. 1 Cash

10,000
Common Stock

10,000
Balance
debit
credit
debit
credit
ref
gj 1
Oct 1
10,000
10,000
Account COMMON STOCK
Acct 3010
Date
Balance
debit
credit
debit
credit
ref
Oct 1
gj 1
10,000
10,000
27
Trial Balance
A list of all the accounts and their balances at
a given time.
It serves to prove the mathematical
equality of debits and credits after posting. It
aids in the preparation of financial statements.
28
Sierra Corporation Trial Balance October 31, 2007
Debit Credit
Cash
Supplies
2,500 Prepaid Insurance

600 Office Equipment
5,000 Notes Payable

5,000 Accounts
Payable
2,500 Unearned
Service Revenue
1,200 Common Stock

10,000 Dividends

500 Service Revenue

10,000 Salaries Expense
4,000 Rent
Expense
900

28,700 28,700