Chapter 2 looks more closely at asset, liability, and shareholder’s equity accounts and how they are affected by double-entry accounting. The transactions introduced in Chapter 1 for Big Dog Carworks Corp. are used to explain “debit” and “credit” analysis. The preparation of a trial balance will be introduced. Additionally, this chapter will demonstrate how transactions are recorded in a general journal and posted to a general ledger. Finally, the concept of the accounting cycle is presented.
Learning Objectives
LO1 – Identify the effect of debit and credit transactions on asset, liability, and shareholders’ equity accounts.
LO2 – Analyze transactions using double-entry accounting.
LO3 – Prepare a trial balance, explain its use, and prepare financial statements from it.
LO4 – Record transactions in a general journal and post them to a general ledger.
LO5 – Define the accounting cycle.
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