Bookkeeping and accounting: based on Schaum's outline of theory and problems of bookkeeping and accounting

145 Pages·2004·3.206 MB·English

by  Fulks, Daniel L., Lerner, Joel J., Staton, Michael K

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SCHAUM’S Easy OUTLINES

B
OOKKEEPING

A
AND CCOUNTING
Other Books in Schaum’s
Easy Outlines Series Include:
Schaum’s Easy Outline: Calculus
Schaum’s Easy Outline: College Algebra
Schaum’s Easy Outline: College Mathematics
Schaum’s Easy Outline: Differential Equations
Schaum’s Easy Outline: Discrete Mathematics
Schaum’s Easy Outline: Elementary Algebra
Schaum’s Easy Outline: Geometry
Schaum’s Easy Outline: Intermediate Algebra
Schaum’s Easy Outline: Linear Algebra
Schaum’s Easy Outline: Mathematical Handbook
of Formulas and Tables
Schaum’s Easy Outline: Precalculus
Schaum’s Easy Outline: Probability and Statistics
Schaum’s Easy Outline: Statistics
Schaum’s Easy Outline: Trigonometry
Schaum’s Easy Outline: Business Statistics
Schaum’s Easy Outline: Economics
Schaum’s Easy Outline: Principles of Accounting
Schaum’s Easy Outline: Beginning Chemistry
Schaum’s Easy Outline: Biology
Schaum’s Easy Outline: Biochemistry
Schaum’s Easy Outline: College Chemistry
Schaum’s Easy Outline: Genetics
Schaum’s Easy Outline: Human Anatomy
and Physiology
Schaum’s Easy Outline: Molecular and Cell Biology
Schaum’s Easy Outline: Organic Chemistry
Schaum’s Easy Outline: Applied Physics
Schaum’s Easy Outline: Physics
Schaum’s Easy Outline: HTML
Schaum’s Easy Outline: Programming with C++
Schaum’s Easy Outline: Programming with Java
Schaum’s Easy Outline: Basic Electricity
Schaum’s Easy Outline: Electromagnetics
Schaum’s Easy Outline: Introduction to Psychology
Schaum’s Easy Outline: French
Schaum’s Easy Outline: German
Schaum’s Easy Outline: Spanish
Schaum’s Easy Outline: Writing and Grammar
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
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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.