Introduction

Chapter 2 will provide an understanding of how business transactions are recorded by the accounting system so that the financial statements can be prepared. As financial statements are prepared periodically, the process of recording and reporting information is a repetitive process or cycle known as the accounting cycle.

Chapter outline

After reading this chapter, you should be able to:

1. Understand how debits and credits and T-accounts are used in a dual entry accounting system
2. Describe the purpose and structure of debits and credits
3. Explain the purpose of the journal, ledger, and trial balance.
4. Record and post accounting transactions and prepare a trial balance and financial statements