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Accounting Journal Entries
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IFRS Overview IFRS Dictionary Intermediate Accounting
U.S. GAAP by Topic Accounting by Topic U.S. Tax Code by Section


What is a journal entry in Accounting?
 
  
Journal entry is an entry to the journal.
   Journal is a record that keeps accounting transactions in chronological order, i.e. as they occur.
  
Ledger is a record that keeps accounting transactions by accounts.
  
Account is a unit to record and summarize accounting transactions.
 
   All accounting transactions are recorded through journal entries that show account names, amounts, and whether those accounts are recorded in debit or credit side of accounts.
 
 
Double-Entry Recording of Accounting Transactions
 
  
To record transactions, accounting system uses double-entry accounting.
   Double-entry implies that transactions are always recorded using two sides, debit and credit.
   Debit refers to the left-hand side and credit refers to the right-hand side of the journal entry or account.
 
   The sum of debit side amounts should equal to the sum of credit side amounts.
   A journal entry is called "balanced" when the sum of debit side amounts equals to the sum of credit side amounts.
 
 
T-Account
 
   This form looks like a letter "T", so it is called a T-account.
  
T-account is a convenient form to analyze accounts, because it shows both debit and credit sides of the account.
 

Account

Debit

Credit

   



Examples of Journal Entries

   Transaction 1: Company A sold its products at $120 and received the full amount in cash.
 

Steps

Self-Questions

Answers

1

What did Company A receive? Cash.

2

If Company A received cash, how would this affect the cash balance? Receiving cash increases the cash balance of the company.

3

Which side of cash account represents the increase in cash? Debit side (Left side).

4

What is the account name to record the sales of products. Sales.

5

Which side of sales account represents the increase in sales? Credit side (Right side).

6

Does the sum of debit side amounts equal to the sum of credit side amounts? In other words, does this journal entry balance? Yes.
$120 = $120

[Journal entry to record transaction 1]

Debit

Credit

Cash

120

 
Sales  

120




Examples of Journal Entries

 
  Transaction 2: Company A purchased supplies and paid $50 in cash.
 

Steps

Self-Questions

Answers

1

What did Company A receive? Supplies.

2

If Company A received supplies, how would this affect the supplies balance? It increases supplies balance.

3

Which side of supplies account represents the increase in cash? Debit side (Left side).

4

What did Company A pay? Cash.

5

Which side of cash account represents the decrease in cash? Credit side (Right side).

6

Does the sum of debit side amounts equal to the sum of credit side amounts? In other words, does this journal entry balance? Yes.

$50 = $50

[Journal entry to record transaction 2] 

Debit

Credit

Supplies

50

 
Cash  

50



Debits and Credits of Accounts
 

Debit

Credit

Increase in asset accounts

Decrease in asset accounts

Increase in expense accounts

Decrease in expense accounts

   

Decrease in liability accounts

Increase in liability accounts

Decrease in equity accounts

Increase in equity accounts

Decrease in revenue accounts

Increase in revenue accounts

  
 
 
 
Normal Balances of Accounts

  
Accounts have normal balances on the side where the increases in such accounts are recorded.
 
   Asset accounts have normal balances on debit side.
  
Expense accounts have normal balances on debit side.
 

  
Liability accounts have normal balances on credit side.
   Equity accounts have normal balances on credit side.
   Revenue accounts have normal balances on credit side.
 

  
In the financial statements, accounts are reported on the sides where they have normal balances.
 
 

Balance Sheet

Assets

Liabilities

 

Owners' Equity

   

 

Income Statement

Expenses

Revenues

   



More Examples of Accounting Journal Entries
 
Adjusting Journal Entries: Review and Examples





Review of Accounting Topics




Principles of Accounting:  

This section provides study guides for students in the principles of accounting courses or introduction to financial accounting courses. 

  
  
  




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Accounting for General Users:  
 
A guide to accounting for users who are interested in understanding accounting reports.  This section explains what users need to know to understand and analyze accounting information provided in the financial statements.  No prerequisite is required to read this section.  

  
  

    Accounting is an information system.

    Users of accounting information

    Financial accounting for external users

    Managerial accounting for internal users

    Statement of Cash Flows provides information about the cash flow of a company.

    Cash flow from operating activities

    Cash flow from investing activities

    Cash flow from financing activities



Intermediate Accounting:  

This section provides study guides for students in the intermediate accounting courses.  Following topics are discussed in this section.

  
  
 

    Depreciation Methods

    Straight Line Depreciation

    Declining Balance Method

    Sum-of-the-years-digits Method

    Accounting for Bonds Payable

    Price of bonds payable

    Discount on bonds payable

    Premium on bonds payable

    Amortization of discount and premium

    Early extinguishment of debts


Advanced Accounting:  

This section provides study guides for students in the advanced accounting courses.  Following topics are discussed in this section. 

  
  


U.S. GAAP by Codification Topic
  
 105  GAAP Hierarchy 
 105  GAAP History 

 205  Presentation of Financial Statements 
 205-20 Discontinued Operations 
 210  Balance Sheet 
 210-20 Offsetting 
 220  Comprehensive Income 
 225  Income Statement 
 225-20 Extraordinary and Unusual Items 
 230  Statement of Cash Flows 
 250  Accounting Changes and Error Corrections 
 260  Earnings per Share 
 270  Interim Reporting
 
 310  Impairment of a Loan
 320  Investment Securities 
 320  Other-Than-Temporary Impairments, FSP FAS 115-2 
 320-10-05 Overview of Investments in Other Entities 
 320-10-35 Reclassification of Investments in Securities
 323-10 Equity Method Investments
 323-30 Investments in Partnerships and Joint Ventures 
 325-20 Cost Method Investments 
 330  Inventory

 340-20 Capitalized Advertising Costs 
 350-20 Goodwill 
 350-30 Intangibles Other than Goodwill 
 350-40 Internal-Use Software 
 350-50 Website Development Costs 
 360  Property, Plant and Equipment
 360-20 Real Estate Sales 
 
 410  Asset Retirement and Environmental Obligations 
 420  Exit or Disposal Cost Obligations 
 450  Contingencies 
 450-20 Loss Contingencies 
 450-30 Gain Contingencies
 480  Redeemable Financial Instruments 

 505-20 Stock Dividends, Stock Splits 
 505-30 Treasury Stock 

 605  SEC Staff Accounting Bulletin, Topic 13 
 605-25 Revenue Recognition - Multiple Element Arrangements 
 
 715-30 Defined Benefit Plans - Pension
 718  Share-Based Payment 
 730  Research and Development 
 730-20 Research and Development Arrangements 

 805  Business Combinations  
 810  Consolidation 
 810  Noncontrolling Interests 
 810  Consolidation of Variable Interest Entities, SFAS 167 
 
 815  Derivatives and Hedging Overview 

 820  Fair Value Measurements  
 820  Fair value when the markets are not active, FSP FAS 157-4
 825  Fair Value Option 

 830  Foreign Currency Matters 
 830-20 Foreign Currency Transactions 
 830-30 Translation of Financial Statements 
 835  Interest 
 835-20 Capitalization of Interest 
 835-30 Imputation of Interest 

 840  Leases 
 840-20 Operating Leases 
 840-30 Capital Leases 
 840-40 Sale-Leaseback Transactions
 845  Nonmonetary Transactions 

 855  Subsequent Events 
 860-20 Sale of Financial Assets, SFAS 166 
 860-50 Servicing Assets and Liabilities, SFAS 156 

 985-20 Costs of software to be sold  
 
International Financial Reporting Standards (IFRS)







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