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ACCOUNTING 101: EASY BOOKKEEPING & ACCOUNTING FOR ​​BEGINNERS, ZEN OF BOOKKEEPING AND ACCOUNTING & MUSIC BY DR. DENVER

Bookkeeping and Accounting for beginners, high-school, college students and new learners available on Amazon.com and YouTube. Click on links below book cover images to review books on Amazon.com

ACCT101: Introduction to Accounting 101: Easy Accounting and Bookkeeping

The material in the book is based on a simple framework for teaching and learning accounting and bookkeeping using activities related to the elements of a Simple Combined Chart of Accounting and Trial Balance shown on the following page and throughout the book. Beginners tend to get overwhelmed at the number of concepts and theories contained in the chapters in accounting textbooks, that they lose sight of the main reasons for studying each chapter. I hope that by including “What is the purpose of this chapter?” in the first few lines of each chapter, the reader will see its purpose....

Learning the many concepts of bookkeeping and accounting can be made easier by reviewing free videos created, owned, and published by experts and made available on YouTube.

THREE MAIN SETS OF BOOKKEEPING/ACCOUNTING ACTIVITIES

A. RECORDING AND POSTING Business or Economic Transactions in a Timely and Accurate manner Based on a Specific Chart of Accounting (COA).

B. CLASSIFYING the Transactions Posted in Item (A) Into Five Groups of Accounting Types: (1) Assets, (2) Liabilities, (3) Equity, (4) Revenue, (5) Expenses.

C. SUMMARIZING AND REPORTING the Classified Groups in (B) for Reporting the Results to Owners, Investors, Government Agencies and Other Parties in the Form of Financial Statements (Balance Sheet, Income Statement etc.) and Special Reports.

Note: Most Accounting Software are Programmed to Automatically Complete Items (B) and (C) Once Transactions in (A) are Correctly Completed Using the Chart of Accounts (COA) and Saved.

EIGHT FUNDAMENTAL SETS OF BOOKKEEPING/ACCOUNTING CONCEPTS TO KNOW

1. CHART OF ACCOUNTS: A Preset List of A Firm’s General Ledger Account Numbers and Their Related Titles Used by a Firm to Record Transactions Incurred on Behalf of the Firm in a Consistent and Systematic Manner and is the Building Block of all Bookkeeping and Accounting Systems. The Creation of a Chart of Accounts (COA) is Generally the First Major Activity Completed by Senior Management Upon Starting a Business. Most Accounting Software Contains One or More Industry-Based Chart of Accounts That can be Customized to Fit the Operating Activities of Different Firms/Businesses.

2. JOURNAL & GENERAL LEDGER: Journals are Used to Initially Record Business Transactions Prior to Posting Them to the General Ledger Accounts Shown in the Chart of Accounts (COA).

3. DOUBLE-ENTRY ACCOUNTING (DRs & CRs: Every Economic/Business Transaction Requires Recording Amounts to Two or More General Ledger Accounts to Indicate the Movement or Transfer of the Related Values Into (DR) and From (CR) One or More Ledger Accounts Based on the Chart of Accounts (COA).

4. DEBITS (DR) & CREDITS (CR): Accounting Language Used to Record/Post Transactions Amounts on the Left (DR) or Right (CR) Amount Columns of the Journal or General Ledger Accounts (See Items 2 & 3) and Based on the Chart of Accounts and Supported by Evidence Such as Receipts, Invoices, Statements etc.

5. JOURNALIZE: (See Item 4) Accounting Language Used as verb to Indicate Recording of Transactions in the Accounting Journal (Item 2) Using the Chart of Accounts (COA).

6. ASSETS, LIABILITIES, & EQUITY ACCOUNTS: Listed in the Chart of Accounts (COA), They Indicate (a) Tangible and Intangible Resources and Items Owned (Assets) by the Firm, (b) Owed by the Firm to Others (Liabilities—Debt), and (c) Owed to/by Investors and Owners of a Firm (Equity). Put Another Way, Assets are Financed by Liabilities/Debt by Third Parties and/or Equity by Owner Investors. See Accounting Equation below.

7. REVENUES & EXPENSES: Amounts Recorded in Accordance With the Accounts Listed in the Chart of Accounts (COA). They Indicate Income Earned from Sales, Services, Commissions, Interest etc. by the Firm (Revenues—CR) and Costs (Expenses—DR) Incurred by the Firm in its Operations.

Note: These are Summarized and Displayed in the Income Statement, and the Net Resulting Difference Between Total Revenues and Total Expenses, the Net Income (CR) or Net Expenses (DR) is Combined With the Total Equity Amount Each Financial Period Shown in the Balance Sheet.

8. THE ACCOUNTING EQUATION, A = L + E: Is Considered the Most Important Concept in Bookkeeping and Accounting. It Summarizes the Concepts of Double-Entry Accounting (Items 3 & 4) and Indicates that Total Assets of the Firm is Financed by Debt to Third Parties (Liabilities) and Equity Investments by Owners of the Firm (ITEM 6). The Amounts must Balance as Indicated in the Accounting Equation. This Relationship is Summarized and Displayed in the Firm’s Balance Sheet.

A Winning Combination: Accounting 101 & Free Bookkeeping and Accounting Videos Available online on YouTube etc.

Learning the many accounting and bookkeeping concepts in this book can be enhanced and supplemented by watching related free videos created and published online by Dr. Pettigrew and other publishing organizations and  individuals on YouTube.com. Indeed, new learners can learn basic Microsoft Office products offered by Microsoft Corporation, basic Quickbooks offered by Intuit online and other resources to supplement their accounting and related computer skills.

EASY STEP-BY-STEP TEACH YOURSELF BASIC ACCOUNTING AND BOOKKEEPING BOOKS & E-BOOKS. OPTIMIZE LEARNING WITH RELATED ONLINE YOUTUBE VIDEOS

Complete Chapters Below Can be Found in the Books and eBooks on Amazon.com

Sections partially copied from Accounting 101: Easy Accounting and Bookkeeping for Beginners © 2017, 2018 Denver Pettigrew, PhD, CPA, MBA

Read More: The complete chapters can be found in Accounting 101: Easy Accounting and Bookkeeping for Beginners and The Zen of Bookkeeping and Accounting: Basic Accounting for Pre-College and New Learners published on Amazon.com

Accounting 101: Easy Bookkeeping and Accounting for Beginners

ACCOUNTING 101: EASY BOOKKEEPING AND ACCOUNTING FOR BEGINNERS, THE RED BOOK

Accounting 101: Easy Bookkeeping and Accounting for Beginners, contains all the chapters in The Zen of Bookkeeping and Accounting: Basic Accounting for Pre-College and New Learners plus additional chapter and appendixes.

Summary Table of Contents:

  • Introduction to Accounting 101: Easy Accounting and Bookkeeping
  • Chapter 1: Must Read Overview of Accounting and Bookkeeping
  • Chapter 2: Business Transactions, Chart of Accounts, and General Ledger
  • Chapter 3: The General Ledger and Trial Balance
  • Chapter 4: Elements of the Balance Sheet
  • Chapter 5: Elements of the Income Statement
  • Chapter 6: Adjusting Entries, Post-Adj. TB, Closing Entries, and Net Income
  • Chapter 7: Income Statement, Balance Sheet, Changes in Owner's Equity
  • Chapter 8: Simple Payroll and Payroll Expenses
  • Chapter 9: The Cash Flows and Bank Reconciliation Statements
  • Chapter 10: Basic Introduction to Financial Ratios and Trend Analysis
  • Chapter 11: Final Thoughts and Encouragement
  • Appendixes

ACCT101:

Chapter 1: Must Read Overview of Accounting and Bookkeeping

Question: What is the purpose of this chapter?

Answer: To introduce you to the objectives of an accounting and bookkeeping system and important fundamental concepts and tools.

Before we can start recording the financial activities of the firm, we must define what accounting and bookkeeping is about. Because accounting and bookkeeping activities are inter-related and sometimes used synonymously, for simplification of explanations we will use the terms interchangeably although technically they are different. Accountants must know bookkeeping and attain a much higher level, and variety, of education and certification, to provide operating and strategic expertise to different levels of managers in firms....

ACCT101: Chapter 2: Business Transactions, Chart of Accounts, and General Ledger

Question: What is the purpose of this chapter?

Answer: To demonstrate how business transactions are recorded and posted in a typical accounting system.

Business transactions are activities performed on behalf of a firm that are measured or valued by money. Business transactions are expenditures (or expenses) or receipts for goods or services for cash, or contractual obligations to be paid or received at a later date—on terms. These business transactions are recorded by the accountant in the books of the business on journal entries guided by the chart of accounts. Business transactions are usually supported (evidenced) by documents such as invoices, bills, receipts, notes, cash, contracts and written agreements, shipping documents, receiving reports, and paper or digital (computer) statements etc.

It is important to distinguish between personal transactions of the owners, and business transactions on behalf of or by the business as an independent organization (entity) separate from the owners. The business is treated as a separate, non-organic, person in the eyes of the law and referred to as a business entity....

ACCT101: Chapter 3: The General Ledger and Trial Balance

Question: What is the purpose of this chapter?

Answer: Provide an overview of the makeup of a typical accounting system using general ledger accounts.

The general ledger contains all the firm’s ledger accounts listed on the chart of accounts (COA). Business transactions are posted to the individual ledger accounts from the entries recorded in the journal on the same sides as recorded in the journal, and the balances in the ledger accounts updated immediately. This type of immediate updating of the general ledger account balances are called perpetual updating, as shown in the tables below.

Journal entries relating to general ledger accounts are sometimes totaled and posted periodically (weekly or monthly) as one entry in the account instead of individually....

ACCT101: Chapter 4: Elements of the Balance Sheet

Question: What is the purpose of this chapter?

Answer: To identify the permanent accounts in the chart of accounts used in the balance sheet.

The balance sheet summarizes what the organization owns—Assets; what it owes to others—Liabilities; and what is owed to owners of the organization—Equity at the end of a financial period. The balance sheet displays the Accounting Equation: Asset = Liability – Equity in detail. We will delay the completion of the balance sheet statement until chapter 6 after closing entries are posted to the income summary account and the net profit or loss for the firm is determined and reported in the income statement report.

In defining the chart of accounts (COA) in chapter 2, general ledger accounts that make up the balance sheet were described as permanent accounts because their balances are carried over from one financial period to the next. A review of the Simple Combined Chart of Accounts and Trial Balance at the end of previous chapters and in Appendix A, shows the categories, description and account numbers that make up the elements of the balance sheet. The COA shows the following subcategories: Asset account numbers beginning with number 1; Liabilities account numbers beginning with the number 2; and Equity account numbers, the number 3....

ACCT101: Chapter 5: Elements of the Income Statement

Question: What is the purpose of this chapter?

Answer: To identify the accounts in the chart of accounts used in the income statement.

The income statement, also known as the profit and loss statement, summarizes the operating activities of the organization over a period called the operating cycle of the organization. In defining the chart of accounts (COA) in chapter 2, general ledger accounts that make up the income statement were described as temporary or nominal accounts because their balances are zeroed out at the end of an operating cycle (or financial period). These accounts begin each financial period with zero balances to account for activities in the new operating cycle....

ACCT101: Chapter 6: Adjusting Entries, Post-Adj. TB, Closing Entries, and Net Income

Question: What is the purpose of this chapter?

Answer: To determine the net profit or loss for the period, by summarizing and closing out the balances in the temporary accounts in the income statement.

Adjusting Entries

At the end of an operating, accountants make adjusting journal entries for unrecorded revenue and expenses to determine the true operating results for the period. This is necessary because payment for some resources used by the firm might not have been made or paid in advance, or transfers from unearned revenues to recognize actual revenues earned, might need to be recorded to determine the true profit or loss for the period. Examples of such adjustments include: payments made in advance for insurance and rent, called prepaid expense (technically prepaid assets); accruals for unpaid wages and salaries of employees; depreciation expense, estimate for bad debts; interest accrued on long-term debts; reclass from unearned revenue to revenue; and inventory adjustments and cost of sales....

ACCT101: Chapter 7: Income Statement, Balance Sheet, Changes in Owner's Equity

Question: What is the purpose of this chapter?

Answer: To introduce the main financial statement reports of a firm and learn the relationships between them.

We have completed the activities shown in steps 1 to 5 of the accounting process to record and post business transactions in the journal and related general ledger accounts; closed the temporary accounts and prepared the income statement; and determined and transfer net income to the retained earnings in the balance sheet, we will now look at the financial statement reports of our hypothetical business....

ACCT101: Chapter 8: Simple Payroll and Payroll Expenses

Question: What is the purpose of this chapter?

Answer: To demonstrate a typical payroll system and related journal entries for a firm.

Simple payroll bookkeeping activities are introduced in this chapter to assist beginners in understanding basic payroll functions in firms; not human resources functions. Actual, real-world situations will be different due to several factors beyond the scope of this book, including: different state rules and regulations; changing federal and state withholding requirements and rates; and different additional personal withholdings. The basic payroll concepts, calculations, and recordings are like the simple examples provided in this chapter, although the quantities and types of withholdings from the gross wages and salaries on the paychecks of individual employees may be different. Additional payroll information and resources can be found on the IRS website, WWW.IRS.gov and in more advanced accounting textbooks.

Payroll expenses for the organization consist of two major parts (1) Wages and Salaries paid to employees, and (2) additional payroll charges payable to the State and Federal government by the organization....

ACCT101: Chapter 9: The Cash Flows and Bank Reconciliation Statements

The Bank Reconciliation Statement

The bank reconciliation is a tool used to provide detailed information about how much cash resources are legally owned by the organization on a specific date.

Question: What is the purpose of this chapter?

Answer: To demonstrate how direct and indirect cash flows methods and bank reconciliation statements are constructed.

Two statements that appear to provide great challenges to new learners are (1) cash flows statement, and (2) the bank reconciliation statement. The cash flows statement is sometimes called the statement of sources and uses of cash.

The Cash Flows Statement

The cash flows statement is a report summarizing the changes in the balance of the cash account between the start and the end of a firm’s operating cycle or financial period, showing the sources and usage of cash by the firm for the period. The change in the cash account balance is classified as financing, investing, and operating cash flows in the statement of cash flows. In other words, the purpose of cash flows statements is to identify what caused the cash account balance to change for the period and classify the reasons. Identifying the causes is done by analyzing the non-cash accounts (assets, liabilities, and equity accounts) in the balance sheet along with items from the income statement for the period. To prepare the cash flows statements we will need to study the financial statements to find the following....

The Bank Reconciliation Statement

The bank reconciliation is a tool used to provide detailed information about how much cash resources are legally owned by the organization on a specific date....


ACCT101: Chapter 10: Basic Introduction to Financial Ratios and Trend Analysis

Question: What is the purpose of this chapter?

Answer: Introduction to popular accounting tools used to analyze the results of a firm’s operating systems and managerial results compared to competitors and industry metrics.

This book is written for new learners of accounting and bookkeeping therefore only a brief introduction and description of financial ratios and trend analysis will be presented. Detailed analyses and explanations can be found in more advanced accounting books. Financial ratios and trend analyses are tools used by accountants in analyzing and reporting on the performance of the organization over time and compared with ratios of competitors and the industry in which the organization operates. The ratios and trend analyses are calculated from data shown on comparative balance sheets and income statements of the firm and its competitors....

ACCT101: Chapter 11: Final Thoughts and Encouragement

I wish to express my appreciation and thanks for taking this journey with me. I hope you learned a great deal from this trip.

General journals were used in the examples in the book because many computerized accounting software systems available for business use require a good understanding of how to journalize business transactions. Many transaction entries in computerized accounting systems are created by the creating, recording, and posting documents such as invoices, cash receipts and checks. This is important to know because when transactions are recorded and saved in a computerized accounting system, the other steps, except for the end-of-period manual adjustments in the accounting process, can be automatically generated by the program....