2 Transaction Analysis - Pearson

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SPOTLIGHTAPPLE COMPUTER, do you manage your music library? You may use Apple Computer s iTunes , which along with thecompany s iPods generates lots of income for the does Apple determine the amount of its revenues, expenses, and net income? Like all othercompanies, Apple Computer has a comprehensive accounting system. Apple s income statement (statementof operations) is given at the start of this chapter. The income statement shows that during fiscal year 2006,Apple made over $19 billion of sales and earned net income of $2 billion. Where did those figures comefrom? In this chapter, we ll show Analysis22 Chapter 40878 Page 53 09/25/07 jhr2 Chapter 40878 9/25/07 3:18 PM Page 5354 Chapter 2Transaction AnalysisChapter 1 introduced the financial statements. Chapter 2 will showyou how companies actually record the transactions that eventually become part ofthe financial OBJECTIVES1Analyzetransactions2Understan dhow accounting works3Recordtransactions in the journal4Usea trial balance5Analyzetransactions using only T-accountsApple Computer, of Operations (Adapted) Fiscal Year Ended September 30, 2006Net of goods expenses: Research and development expense.

58 Chapter 2 Transaction Analysis Every transaction affects the financial statements of the business, and we can prepare financial statements after 1, 2, or any number of transactions. For example, Genie Car Wash could report the company’s …

  Transactions