• Unit 2: Recording Business Transactions

    There is a specific way that data is recorded, so a foundational understanding of this process is necessary. Understanding the meaning and use of concepts like journals, journal entries, ledger, trial balance, debits and credits, and vertical/horizontal analysis is an important part of studying financial accounting.

    Completing this unit should take you approximately 6 hours.

    • Upon successful completion of this unit, you will be able to: 

      • describe the accounting cycle and be able to identify specific debits and credits, journals, t-accounts, a trial balance, and resulting financial statements.

    • 2.1: Debits and Credits

      • Recording Business Transactions URL

        This chapter explains the rules regarding debits and credits. Debits and credit increase and decrease certain accounts. Spend some time learning the rules of debits and credits, since they are the foundation of accounting principles. Posting a debit where a credit should be, or vice versa, will cause you to be out of balance. You will then have to re-trace all of your postings to uncover your error, which would be very frustrating and time-consuming.

    • 2.2: The Accounting Process

      • The Accounting Cycle URL

        Read each section on this page. You have been exposed to the concepts of recording and journalizing transactions previously, but this explains the rest of the accounting process.

      • Accounting Cycle Steps 5–9 Page

        Watch these short videos on the accounting cycle. If you need to, rewatch the videos for Steps 1 through 4 before you begin. These videos go through the entire accounting cycle: journals, postings, worksheets, adjusting entries, post-closing entries, and financial statements. You will see the process as one continuous activity. The method is slightly different between sole proprietorship companies and corporations. Learn both, since over the course of your career you may find yourself in both types of organization.

      • Recording Business Transactions URL

        Read page 76 on the rules of debits and credits, and copy and keep handy as a quick reference. Then, jump ahead and read pages 80 and 81. Examine the section on the ledger and the chart of accounts again. Learning about financial accounting for the first time is all about building upon and refining your knowledge of accounting processes and methods step-by-step. Be sure to note which accounts are permanent and which accounts are temporary.

    • Unit 2 Assessment

      • Unit 2 Assessment Quiz

        Take this assessment to see how well you understood this unit.

        • This assessment does not count towards your grade. It is just for practice!
        • You will see the correct answers when you submit your answers. Use this to help you study for the final exam!
        • You can take this assessment as many times as you want, whenever you want.