ACC 290 Week 1 Summary - Lecture notes 1,3 PDF

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Week 1 Summary During week one I have learned much about recording basic financial transactions. The four basic financial statements include income, retained earnings, balance, and statement of cash flows. These are important because they provide a way for the organization to judge their financial performance. Income statements provide a description of how profitable the business is. Retained earnings reports what income was reinvested in the organization and was not distributed to the stockholders. Balance statements relay the assets and liabilities of the organization. Statement of cash flows shows the gross receipts and gross payments. A debit is an asset or increase in cash and a credit is a decrease in cash. Debits normally increase assets and decrease liabilities and credits normally decrease assets and increase liabilities. Debits and credits are used to record business transactions by the type of account that is used. Expenses and assets are listed on the left side and liabilities and revenue is listed on the right side of the T. Each time a transactions occurs they are listed in the journal and it will show which accounts are involved in the transactions and if they are debits or credits. The general journal provides a breakdown of individual transactions so that tracking the transactions is possible. Ledgers summarize the financial information and provide the current balance of each separate account. The journal entry posting should always have a reference number or document number and record date of transaction to support details for the transaction. This information is taken from the journals and placed in the ledgers because it is another means of control. Having

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control lessens the opportunity for mistakes because discrepancies can be seen when totals do not balance out. References Kimmel, P. D., Weygandt, J. J., & Kieso, D. E. (2011). Financial accounting: Tools for business decision making (6th ed.). Hoboken, NJ: John Wiley & Sons. University of Phoenix. ( 2011). Week One Supplemental notes: debit vs credit. Retrieved from University of Phoenix, ACC290 - Principles of Accounting I website....