Bookkeeping and Accounting

145 Pages·2005·5.07 MB·English

Professional

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SCHAUM’S Easy OUTLINES

B
OOKKEEPING

A
AND CCOUNTING
Other Books in Schaum’s
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SCHAUM’S Easy OUTLINES

B
OOKKEEPING A ND

A
CCOUNTING

Based on Schaum’s
Outline of Theory and Problems of
Bookkeeping and Accounting, Third Edition
by Joel J. Lerner, M.S.,Ph.D.
Abridgement Editors
Daniel L. Fulks, Ph.D.
and
Michael K. Staton
SCHAUM’S OUTLINE SERIES
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DOI: 10.1036/0071431063
For more information about this title, click here.
Contents
Chapter 1 Assets, Liabilities, and Capital 1
Chapter 2 Debits and Credits: The Double-Entry
System 6
Chapter 3 Journalizing and Posting
Transactions 12
Chapter 4 Financial Statements 17
Chapter 5 Adjusting and Closing Procedures 24
Chapter 6 Repetitive Transactions—The Sales
and the Purchases Journals 33
Chapter 7 The Cash Journal 44
Chapter 8 Summarizing and Reporting Via
the Worksheet 49
Chapter 9 The Merchandising Company 55
Chapter 10 Costing Merchandise Inventory 61
Chapter 11 Pricing Merchandise 74
Chapter 12 Negotiable Instruments 82
Chapter 13 Controlling Cash 94
Chapter 14 Payroll 102
Chapter 15 Property, Plant, and Equipment:
Depreciation 108
Chapter 16 The Partnership 119
Chapter 17 The Corporation 126
Index 135
v

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Chapter 1
Assets,
Liabilities,
and Capital
In This Chapter:
✔ Nature of Accounting

✔ Basic Elements of Financial

Position: The Accounting Equation
✔ Summary
✔ Solved Problems
Nature of Accounting
An understanding of the principles of book­
keeping and accounting is essential for anyone
who is interested in a successful career in busi­
ness. The purpose of bookkeeping and account­
ing is to provide information concerning the fi­
nancial affairs of a business. This information
is needed by owners, managers, creditors, and
governmental agencies.
An individual who earns a living by recording the financial activities
of a business is known as a bookkeeper, while the process of classifying
1
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2 BOOKKEEPING AND ACCOUNTING
and summarizing business transactions and interpreting their effects is
accomplished by the accountant. The bookkeeper is concerned with tech­
niques involving the recording transactions, and the accountant’s objec­
tive is the use of data for interpretation. Bookkeeping and accounting
techniques will both be discussed.
Basic Elements of Financial Position:
The Accounting Equation
The financial condition or position of a business enterprise is represent­
ed by the relationship of assets to liabilities and capital.
Assets: Properties that are owned and have money value—for instance,
cash, inventory, buildings, equipment.
Liabilities: Amounts owed to outsiders, such as notes payable, accounts
payable, bonds payable.
Capital: The interest of the owners in an enterprise; also known as own­
ers’ equity.
These three basic elements are connected by a fundamental rela­
tionship called the accounting equation. This equation expresses the
equality of the assets on one side with the claims of the creditors and
owners on the other side:
Assets = Liabilities + Owner’s Equity
REMEMBER
The accounting equation of Assets =
Liabilities + Owner’s Equity should
balance after every transaction.