GSBA 510 Lecture Deck Class 2 and 3 F24 V1 (1)
Page 1: Course Introduction
Course: GSBA 510: Processing Accounting Information
Instructor: DeFond (Chapter 2)
Institution: USC Leventhal School of Accounting, University of Southern California
Page 2: Recording Notice
Class sessions will be recorded via Zoom.
Possible use of Panopto for additional recordings.
Participants should be aware that all discussions and breaks may be recorded.
Page 3: Class Topics Overview
I. Financial Accounting and Business Decisions (Review from DeFond, Chapter 1)
II. Processing Accounting Information (DeFond, Chapter 2), Part 1
Page 4: Course Material
Focus: DeFond, Chapter 2 on Processing Accounting Information
Page 5: Learning Objective 1
Objective: Identify the five major steps in the accounting cycle.
Page 6: Five Major Steps in the Accounting Cycle
Analyze: Evaluate transactions based on source documents.
Record: Document transactions in accounting records.
Adjust: Modify accounts to reflect accurate financial position.
Report: Prepare financial statements for stakeholders.
Close: Finalize temporary accounts at period end.
Page 7: Learning Objective 2
Objective: Analyze and record transactions using the accounting equation.
Page 8: Analyzing Transactions
Main concept: The accounting equation: Assets = Liabilities + Stockholders’ Equity.
Page 9: Definition of an Accounting Transaction
Definition: An economic event recorded in the company's accounting records.
Affects elements of the accounting equation (assets, liabilities, stockholders’ equity).
Key principle: Double-entry accounting requires at least two elements to be affected to maintain balance.
Page 10: Accounting Equation Representation
Illustrates how elements of equity interact with common accounting transactions.
Page 11: Quiz Question
First step in the accounting cycle:
A. Report
B. Analyze
C. Record
D. Adjust
Page 12: Accounting Equation Illustration
Example of how to maintain balance in the accounting equation through transactions in the new business.
Page 13: Issued Stock Example
Transaction: Gloria invested $30,000 cash for common stock.
Effects on equation:
Assets: Cash = $30,000
Liabilities: $0
Stockholders’ Equity: Common Stock = $30,000
Page 14: Prepaid Rent Example
Transaction: Prepaid rent adjustment for the year at $500/month ($6,000 total).
Effects on equation:
Cash decreases by $6,000
Prepaid Rent increases by $6,000.
Page 15: Purchasing Inventory on Account
Transaction: Purchased pizza ingredients for $3,000 on account.
Effects on equation:
Assets increase for Supplies Inventory by $3,000.
Liabilities increase for Accounts Payable by $3,000.
Page 16: Bank Loan Example
Transaction: Obtained a $20,000 bank loan.
Effects on equation:
Assets increase for Cash by $20,000.
Liabilities increase for Notes Payable by $20,000.
Page 17: Delivery Van Purchase
Transaction: Purchased delivery van for $15,000 using cash from the loan.
Effects on equation:
Cash decreases by $15,000.
Van asset increases by $15,000.
Page 18: Hiring Employee
Transaction: Hiring does not affect accounting records initially as no asset, liability, or equity is impacted.
Page 19: Pizza Sales Revenue
Transaction: Sold pizzas for $12,000 cash.
Effects on equation:
Cash increases by $12,000.
Revenue increases stockholders’ equity.
Page 20: Employee Payment Transaction
Transaction: Paid the part-time employee $1,000.
Effects on equation:
Cash decreases by $1,000.
Expense reduces retained earnings.
Page 21: Transaction Summary
Della Gloria Pizzeria's unadjusted balances by December 31:
Assets: $64,000
Liabilities: $23,000
Stockholders’ Equity: $41,000
Net Income: $11,000
Page 22: Quiz Question
Purchasing supplies on account impacts:
A. Increase and decrease to assets
B. Increase in assets and decrease to liabilities
C. Increase in assets and liabilities
D. Decrease to assets and liabilities.
Page 23: Learning Objective 3
Objective: Introduce the Transaction Analysis Template.
Page 24: Transaction Analysis Template
Template offers a way of showing transaction effects on financial statements, ensuring the accounting equation remains balanced.
Page 25: Pizza Sales Transaction Analysis
Detailed view of how pizza sales transaction affects the financial statements and keeps the accounting equation balanced.
Page 26: Learning Objective Overview
Next topic: Explain accounts, chart of accounts, and general ledger.
Page 27: Account System
Accounts are individual records for specific assets, liabilities, or stockholders’ equity items.
Page 28: Recording Transactions
Steps in transactions: Identify and analyze source documents such as invoices and receipts.
Page 29: Transaction Recording
Record transaction after analyzing which accounts and amounts are involved.
Page 30: Chart of Accounts
Overview: A list of all account titles grouped by the five major components of accounting (assets, liabilities, stockholders’ equity, revenues, expenses).
Page 31: General Ledger
Definition: A list of accounts and respective amounts from all transactions, used for preparing financial statements.
Page 32: Future Topics
Upcoming discussion: Accrual Basis of Accounting (Overview of DeFond, Chapter 3).