Accounting Accounting Business Transaction Event or condition that
Accounting
Accounting �Business Transaction �Event or condition that must be recorded �Payment of monthly telephone bill of $68 �Purchase of office supplies on credit for $850 �Liability �Agree to pay for items in the near future �This liability is recorded in Accounts Payable
Accounting �Revenue �Amount charged to customers for goods or services sold �Accounts Receivable �Business makes sales on account, allowing customers to pay later
Accounting �Assets �Properties owned by a business �Equities �Rights or claims to the properties of a business
Accounting �ASSETS = EQUITIES �Equities can be subdivided into two principal types: rights of creditors and the rights of owners �Liabilities – rights of creditors and represent debts of the business �Owner’s Equity – rights of the owner(s) �ASSETS = LIBILITIES + OWNER’S EQUITY
Accounting Assets Cash (a) 10, 000 = Owner’s Equity Jerry Miles, Capital 10, 000 Investment
Accounting Assets Cash + Land Bal. 10, 000 (b) -7, 500 +7, 500 Bal. 2, 500 7, 500 = Owner’s Equity Jerry Miles, Capital 10, 000 ______ 10, 000
Accounting Assets Cash + Supplies + Land Bal. 2, 500 7, 500 (c) +850 _____ 2, 500 +850 7, 500 = Liabilities + Owner’s Equity Accounts + Jerry Miles, Payable Capital 10, 000 +850 ______ +850 10, 000
Accounting Assets Cash + Supplies + Land Bal. 2, 500 850 7, 500 (d) -400 _____ 2, 100 850 7, 500 = Liabilities + Owner’s Equity Accounts + Jerry Miles, Payable Capital 850 10, 000 -400 ______ 450 10, 000
Accounting �Income Statement �Summary of the revenue and the expenses of a business for a specific period of time like a month or a year. �Balance Sheet �List of assets, liabilities, and owner’s equity for a specific date
Accounting �Statement of Owner’s Equity �Summary of the changes in the owner’s equity of a business for a specific period of time
Increase Decrease Normal Balance Asset Debit Credit Debit Liability Credit Debit Credit Owner’s Equity Capital, Capital Stock, Retained Earnings Credit Debit Revenue Credit Debit Credit Expense Debit Credit Debit Balance sheet accounts: Drawing, Dividends Income statement accounts:
Balance Sheet Accounts Assets Cash Accounts Receivable Income Statement Accounts Revenue Sales Expenses Supplies Expense Prepaid Rent Salary Expense Photographic Equipment Rent Expense Liabilities Accounts Payable Salaries Payable Owner’s Equity Capital Miscellaneous Expense
Posting �Posting is the process of adding a debit or credit journal entry to an account in the G/L
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