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Ch 3: Mechanics of the Accounting Cycle

About This Chapter

Watch online video lessons to learn about the accounting equation, source documents, ledgers and more. Each lesson is accompanied by a short multiple-choice quiz to help check your understanding of these accounting topics.

Mechanics of the Accounting Cycle - Chapter Summary and Learning Objectives

In this chapter, we will take a look at the mechanics of the accounting cycle. Emphasis will be put on the accounting equation and the various ways in which it is used. You will learn about how to keep your accounts balanced and keep good records of debits and credits. Lessons will cover a variety of topics that will help you learn to keep accounts managed and ensure that you record everything in the ledger properly. Some of the things you will learn about include:

  • The components of the accounting equation
  • The purpose of source documents
  • Categorizing transactions
  • Defining ledgers
  • Computing a return on assets
  • Using financial statement ratios

VideoObjective
The Accounting Equation: Definition & Components Learn about the components of the accounting equation.
Source Documents in Accounting: Definition and Purpose Study the purpose of source documents.
Using the Accounting Equation: Adding Revenues, Expenses & Dividends Take a look at adding revenues, expenses and dividends.
What Are Accounts? - Definition and Use to Categorize Transactions Find out how to use accounts to categorize transactions.
Ledgers and Chart of Accounts: Definitions and Use Examine ledgers and chart of accounts.
Understanding Debits and Credits in Accounting Explore the role of debits and credits in double-entry accounting.
Recording Business Transactions in Accounting Learn how to record the effects of various transactions, such as selling goods, acquiring assets and collecting cash.
Using the Accounting Equation: Analyzing Business Transactions Study the process of analyzing business transactions using the accounting equation.
Computing and Interpreting Return on Assets Find out how to compute and interpret return on assets.
Journal Entries and Trial Balance in Accounting Take a look at recording transactions in a journal and determining a trial balance.
Financial Statement Ratios: Determining Company Performance Examine how to compute various financial statement ratios, and how to use them to analyze company performance.

11 Lessons in Chapter 3: Mechanics of the Accounting Cycle
The Accounting Equation: Definition & Components

1. The Accounting Equation: Definition & Components

There are a few basic building blocks that form the foundation of accounting. One of those is the accounting equation. In this lesson, you will learn what makes up the accounting equation, its purpose, and how it works.

Source Documents in Accounting: Definition and Purpose

2. Source Documents in Accounting: Definition and Purpose

Do you know what role source documents play in accounting? If not, don't worry; by the end of this lesson, you will. You will also learn the definition of source documents and see some common examples of source documents.

Using the Accounting Equation: Adding Revenues, Expenses & Dividends

3. Using the Accounting Equation: Adding Revenues, Expenses & Dividends

Accounting is built on a solid foundation called the basic accounting equation. In this lesson, you're going to learn what happens when you add revenue, expenses, and dividends to the basic equation.

What Are Accounts? - Definition and Use to Categorize Transactions

4. What Are Accounts? - Definition and Use to Categorize Transactions

Everything in this world is made up of parts. Accounting is no different. The numerous parts that exist in the accounting world are called accounts. In this lesson, you will learn what accounts are, how they are classified, and what they do.

Ledgers and Chart of Accounts: Definitions and Use

5. Ledgers and Chart of Accounts: Definitions and Use

There are several key concepts that are important to learn when it comes to accounting. In this lesson, you will learn about the ledger and the chart of accounts.

Understanding Debits and Credits in Accounting

6. Understanding Debits and Credits in Accounting

Debits and credits are major players in the accounting world. In this lesson, you will learn just what debits and credits are and why they are important to accounting.

Recording Business Transactions in Accounting

7. Recording Business Transactions in Accounting

Recording a transaction is the first step in the accounting cycle. In this lesson, you will learn why transactions are recorded, where they are recorded, and how they are recorded.

Using the Accounting Equation: Analyzing Business Transactions

8. Using the Accounting Equation: Analyzing Business Transactions

Transaction analysis can be a tricky task. In this lesson, you will learn what transaction analysis is, how to analyze a transaction, and how it is related to the accounting equation.

Computing and Interpreting Return on Assets

9. Computing and Interpreting Return on Assets

There are a number of ratios that can be calculated by information found on the financial statements. In this lesson, you will learn about return on assets.

Journal Entries and Trial Balance in Accounting

10. Journal Entries and Trial Balance in Accounting

There are several concepts that make up an accounting cycle. In this lesson, you will learn about two of those - journal entries and the trial balance.

Financial Statement Ratios: Determining Company Performance

11. Financial Statement Ratios: Determining Company Performance

Have you ever wondered why the financial statements are so important to a company? In this lesson, you will learn about several financial statement ratios and how they help determine company performance.

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