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Research Lecture Accrual Accounting Process 1
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Research about accrual accounting process part 1
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Accrual Accounting Process:Part I
15.511 Corporate Accounting
Summer 2004
Professor SP Kothari
Sloan School of Management
Massachusetts Institute of Technology
June 11, 2004
1
,An accountant’s functions include
Classifying and summarizing, made easier by the
repetitive nature of business transactions
All repetitive transactions of the same nature are
recorded and summarized in one account
An account is a storage unit used to classify and
summarize money measurements of business
activity of a similar nature
Each account has a title
2
,T-Account
Used for illustrative and pedagogical purposes
Has two sides
Debit means Left
Credit means Right
Created for each type of
Asset
Liability
Stockholders’ equity
3
, Recording changes in Assets and
Liabilities
Increases in assets are recorded on the left side of the T-
account
Decreases are recorded on the right side of the T-account
Reverse for liabilities and stockholders’ equity
Assets = Liabilities + Stockholders’ equity
Assets are on the left side of the Balance Sheet Equation
Liabilities and owners’ equity are on the right side
4
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