QuestionJune 8, 2025

Chapter 2 Explain the accounting cycle of Accounts? Understand the effect of transactions on the accounting equation Which accounts normally have a debit balance?...a credit balance? What is a journal entry? What is posting? Record business transactions in journal entry form (identify accounts needed and whether they should be debited or credited)

Chapter 2 Explain the accounting cycle of Accounts? Understand the effect of transactions on the accounting equation Which accounts normally have a debit balance?...a credit balance? What is a journal entry? What is posting? Record business transactions in journal entry form (identify accounts needed and whether they should be debited or credited)
Chapter 2 Explain the accounting cycle of Accounts? Understand the effect of transactions on the accounting equation Which accounts normally have a debit balance?...a credit balance? What is a journal entry? What is posting? Record business transactions in journal entry form (identify accounts needed and whether they should be debited or credited)

Solution
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Answer

Assets and expenses normally have a debit balance; liabilities, equity, and revenue normally have a credit balance. Explanation 1. Define the Accounting Cycle The accounting cycle is a series of steps followed to record and report financial transactions, including identifying, recording, adjusting, and closing entries. 2. Explain the Chart of Accounts A chart of accounts is a list of all accounts used by a business in its accounting system, categorized into assets, liabilities, equity, revenues, and expenses. 3. Understand Transaction Effects on Accounting Equation Transactions affect the accounting equation Assets = Liabilities + Equity. Each transaction must keep this equation balanced. 4. Identify Debit and Credit Balances Accounts with normal debit balances include assets and expenses. Accounts with normal credit balances include liabilities, equity, and revenue. 5. Define Journal Entry and Posting A journal entry records a transaction in the accounting system. Posting transfers these entries from the journal to the ledger. 6. Record Business Transactions Identify accounts involved, determine if they should be debited or credited based on transaction type, and record them in journal entry form.

Explanation

1. Define the Accounting Cycle<br /> The accounting cycle is a series of steps followed to record and report financial transactions, including identifying, recording, adjusting, and closing entries.<br /><br />2. Explain the Chart of Accounts<br /> A chart of accounts is a list of all accounts used by a business in its accounting system, categorized into assets, liabilities, equity, revenues, and expenses.<br /><br />3. Understand Transaction Effects on Accounting Equation<br /> Transactions affect the accounting equation $Assets = Liabilities + Equity$. Each transaction must keep this equation balanced.<br /><br />4. Identify Debit and Credit Balances<br /> Accounts with normal debit balances include assets and expenses. Accounts with normal credit balances include liabilities, equity, and revenue.<br /><br />5. Define Journal Entry and Posting<br /> A journal entry records a transaction in the accounting system. Posting transfers these entries from the journal to the ledger.<br /><br />6. Record Business Transactions<br /> Identify accounts involved, determine if they should be debited or credited based on transaction type, and record them in journal entry form.
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