This course will teach you the tools you'll need to understand the fundamentals of financial accounting. Concise videos, the financial records of a small business, and "your turn" activities guide you through the three most commonly used financial statements: the Balance Sheet, the Income Statement, and the Statement of Cash Flows. Beyond recording transactions, you'll learn how to prepare these financial statements, and read and analyze them to draw basic conclusions about a company's financial health. By the end of this course, you will be able to: - Use journal entries to record transactions; - Prepare and use t-accounts to summarize transactions recorded during an accounting period; - Describe the three most commonly used financial statements and how they fit together; - Prepare these financial statements based on transactions recorded during an accounting period; and - Draw basic conclusions about a company's financial health.
Recording Transactions: Your Turn
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来自 University of Virginia 的课程
Financial Accounting Fundamentals
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从本节课中
Introduction to Recording Transactions
After learning about the Balance Sheet, we’re ready to move on to using journal entries to record transactions, then t-accounts to summarize transactions recorded during an accounting period. We’ll apply those tools to record transactions for a fictional startup company, The Garden Spot, during its first year of operations (TGS Year 1). As we go along, we’ll also evaluate the effect of transactions on the balance sheet equation to ensure it remains balanced.
与讲师见面
Luann J. LynchAlmand R. Coleman Professor of Business Administration
Darden School of Business
Now it's your turn.
I'm going to present you with several transactions so you can practice.
After each transaction, take a few minutes and give it a try, and then come back and
we'll see how you did.
Now this is going to be kind of like eating vegetables.
You just have got to learn how to do it.
First transaction to practice.
ABC Company buys $15,000 of inventory on account.
Now remember, you need to do a couple of things.
You need to record the journal entry.
And then you need to post the journal entry to the appropriate T-accounts.
Take a few minutes, give it a try, then come on back and we'll see how you did.
In the meantime, I'll eat one of these just so
you don't feel like you're by yourself.
So, how did you do?
Let's take a look and see.
So, let's record the journal entry, remember the four things that we've got to
know to be able to record the journal entry.
What accounts were affected, what type of accounts they are.
Assets, liabilities or owners equity or do they increase or
decrease and the dollar amount.
So here, we have inventory, increasing, inventories and asset.
It's increasing and so it is a left side entry or a debit.
So on the journal entry, we have inventory on the left side.
The other account that's affected is the accounts payable account.
Notice that the company did not pay cash for the inventory.
They bought it on account.
So they now have an obligation
to pay the supplier at some point in the future the $15,000.
So, its liabilities increase.
When liabilities increase, that's a right side entry, or a credit.
So, the right side to Accounts Payable for $15,000.
Let's post those to the T accounts.
Pretty simply, we have $15,000 left hand side entry to the inventory account.
So that is posted to the left side of the inventory T-account.
The $15,000 entry to the accounts payable account is a right side entry, so
we post that to the right side of the accounts payable T-account.
Okay, nice work.
Let's move to the next one.
ABC Company pays suppliers $5,000 for
inventory that it previously purchased on account.
Take a few minutes.
Give it a try.
And then come back and we'll see how you did.
And, yes, okay, I will eat another brussels sprout so
you don't feel alone while you're doing your work.
So how did you do with this one?
Did you remember to record your journal entry and
did you remember to post that journal entry to the T-account.
You notice I didn't give you that hint before we started on this one.
Well, let's take a look.
Accounts payable, which is a liability,
decreases here because we've paid off $5,000 of the liability.
A decrease in the liability is a left-side entry or a debit, so
we put that on the left side of the journal entry.
We use cash to pay the supplier.
So cash goes down, cash is an asset.
It's a decrease, and so it's a right side entry or a credit.
Let's post those to the T-account.
The left side entry to the accounts payable
account gets posted to the left side of that T-account.
The right side entry to cash gets posted to the right side of the cash T-account.
Nice work.
Let's try another one.
ABC company purchases $50,000 in equipment using cash.
Take a few minutes, give it a try, then come back, we'll see how you did.
Let's see how you did.
Let's start with the journal entry.
Here, ABC Company purchases some equipment.
So its equipment account increases,
which is an asset that's a left hand side entry or a debit for $50,000.
It pays cash, so it's cash account goes down.
Since cash is an asset, it's decreasing that's a right side entry or a credit.
Let's post these two to the T-Accounts.
The left side entry to the equipment account
is posted to the left side of that T-Account and the right side entry to
the cash account is posted to the right side of that T-Account.
Something tells me you're getting the hang of this.
Let's try another one.
ABC Company issues 1,000 shares of common stock for ten dollars cash per share.
Take a few minutes.
Give this one a try.
Then come back and we'll see how you did.
This one's a little more difficult.
I'll take two of these.
Okay let's se how you did on this one.
The journal entry, the easy part, I'm going to do first.
We know that the company got cash in exchange for that stock.
So it's cash account which is an asset, increases by $10,000,
which is the 1000 shares times the $10 per share.
There's another account that has to be affected, because of course the total of
our left-side entries have to equal the total of our right-side entries.
When a company issues stock to its investors or owners, that
is recorded in an owner's equity account, and we'll call that capital stock.
So, capital stock, which is an owner's equity account, increases by $10,000.
Since it's an owner's equity account and
it's increasing, it's a credit on the right size of the journal entry.
Let's post these to the T-accounts.
The left side entry to cash gets posted on the left side of that T-account.
The right side entry to capital stock gets posted to the right side
of that T-account.
Let's try another one.
ABC company obtains a 10,0000 dollar loan from the bank.
Take a few minutes, give this one a try, then come back and we'll see how you did.
These are growing on me.
Let's start with the journal entry.
The company obtains a $10,000 loan so it's cash balance increases.
Cash is an asset.
The balance increases by $10,000.
It's a left side entry to the cash account.
By obtaining a loan, the company now has an obligation to repay that loan, so
it has a liability.
We'll call that liability loan payable, or we could call it loan from the bank, or
something like that.
Importantly though, it's a liability account and it increases so
that means it's a right side entry or a credit in the journal entry.
Let's post to the T account.
Left side to cash, left side on the cash T account.
Right side to loan payable Right-side to the loan payable T-account.
This is getting kind of fun, isn't it?
Another one.
I'm going to run out of brussels sprouts soon, don't worry.
ABC Company purchases a building for $120,000.
With a loan from the bank.
Take a few minutes, give this one a try, and come back and we'll see how you did.
This is a hard one.
Kay, how did you do with that one.
Let's take a look at the journal entry.
The company purchases a building, so its acquired a new asset.
We'll call it Building, sometimes people call it Property, Plant and Equipment.
We'll call it a building just for simplicity.
It's an asset account.
That balance increases by $120,000, so that's a left side entry, or a debit.
The company took out a loan to finance that purchase, so
it's incurred an obligation to pay the loan back to the bank.
So that will be a liability.
Since we have a liability, that's increasing.
That's a right-side entry in the journal entry.
Let's post these to their respective T-accounts.
The left side to the building gets posted to the left side of the building
t account.
The right side to loans payable gets posted to the right side of
the loan payable t account.
One more.
ABC company purchased a five year insurance policy for
$10,000 and pay the premiums in advance.
Take a few minutes, give it a try, then come back, and we'll see how you did.
How did you do with that one?
Let's take a look.
The company bought something.
Instead of buying a building which is an asset,
it bought an insurance policy which is an asset.
So we're going to increase an asset account, I've called it prepaid insurance
here, but we could call it insurance policy or insurance.
The important thing is that it's an asset account.
I've called it prepaid insurance and it increases by $10,000.
So that is a left side entry in the journal entry.
The company paid cash, so
it's cash balance, which is an asset, decreased by $10,000.
That would be a right side entry, or a credit.
Let us post to the T accounts, the left side to the insurance asset account,
posted to the left side of that T account to cash is posted to the right side
of the Cash T-Account.
Very nice work!
I'm sure that you're ready to take a break.
I've eaten enough brussels sprouts, so let's stop for now.
We'll move forward with some additional practice Later.
