The following will be discussed in this chapter: Basic accounting equation expanded to include income and expenses, transactions and balancing the equation, linking the income statement to the balance sheet through owners’ equity, horizontal model, adjustments, transaction analysis. | CHAPTER 3 The Accounting Process 3- Copyright 2007 McGraw-Hill Australia Pty Ltd PPTs t/a Accounting: What the Numbers Mean 2e by Marshall, McCartney & Van Rhyn Slides prepared by John Tretola Overview Basic accounting equation expanded to include income and expenses. Transactions and balancing the equation. Linking the income statement to the balance sheet through owners’ equity. Horizontal model Adjustments Transaction analysis 3- Copyright 2007 McGraw-Hill Australia Pty Ltd PPTs t/a Accounting: What the Numbers Mean 2e by Marshall, McCartney & Van Rhyn Slides prepared by John Tretola The Accounting Process Transactions are economic exchanges between entities that are accounted for and reflected in financial statements. 3- Copyright 2007 McGraw-Hill Australia Pty Ltd PPTs t/a Accounting: What the Numbers Mean 2e by Marshall, McCartney & Van Rhyn Slides prepared by John Tretola A = L + OE The Accounting Equation The basic accounting equation will always remain in balance and we can now also expand it to include revenues and expenses. 3- Copyright 2007 McGraw-Hill Australia Pty Ltd PPTs t/a Accounting: What the Numbers Mean 2e by Marshall, McCartney & Van Rhyn Slides prepared by John Tretola A = L + OE The Accounting Equation Share capital Retained earnings (B/S) Retained earnings beginning of period Income- expenses 3- Copyright 2007 McGraw-Hill Australia Pty Ltd PPTs t/a Accounting: What the Numbers Mean 2e by Marshall, McCartney & Van Rhyn Slides prepared by John Tretola A = L + OE The Accounting Equation A = L + SC +RE + (I – E) - D Where: SC = share capital RE = retained earnings beginning I = income E = expenses D = dividends paid 3- Copyright 2007 McGraw-Hill Australia Pty Ltd PPTs t/a Accounting: What the Numbers Mean 2e by Marshall, McCartney & Van Rhyn Slides prepared by John Tretola Let’s see how some transactions affect the operation of this equation. Transactions 3- Copyright 2007 McGraw-Hill Australia . | CHAPTER 3 The Accounting Process 3- Copyright 2007 McGraw-Hill Australia Pty Ltd PPTs t/a Accounting: What the Numbers Mean 2e by Marshall, McCartney & Van Rhyn Slides prepared by John Tretola Overview Basic accounting equation expanded to include income and expenses. Transactions and balancing the equation. Linking the income statement to the balance sheet through owners’ equity. Horizontal model Adjustments Transaction analysis 3- Copyright 2007 McGraw-Hill Australia Pty Ltd PPTs t/a Accounting: What the Numbers Mean 2e by Marshall, McCartney & Van Rhyn Slides prepared by John Tretola The Accounting Process Transactions are economic exchanges between entities that are accounted for and reflected in financial statements. 3- Copyright 2007 McGraw-Hill Australia Pty Ltd PPTs t/a Accounting: What the Numbers Mean 2e by Marshall, McCartney & Van Rhyn Slides prepared by John Tretola A = L + OE The Accounting Equation The basic accounting equation will always remain in
