Ch 02 - LEARNING OBJECTIVE 1 Describe the basic elements of...

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1 1 Describe the basic elements of a financial accounting system. LEARNING OBJECTIVE
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2 Set of rules to record economic events Framework to prepare financial statements Controls to detect errors LO 1 BASIC ELEMENTS OF FINANCIAL ACCOUNTING SYSTEM
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3 FRAMEWORK Integrated financial statement approach Analyzes, Records, Summarizes Transactions by Integrating the accounting equation with Income statement Statement of Cash Flows LO 1
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4 Integrated Financial Statement Framework BALANCE SHEET Assets = Liabilities + Stockholders’ Equity Cash + A/R + PP&E A/P + Wages Pay. + Notes Cap Stock + R.E CASH FLOWS Operating Activities Investing Activities Financing Activities . Net Increase/(Decrease) + Beginning Cash = Ending Cash INCOME STATEMENT Revenues - Expenses = Net Income RETAINED EARNINGS Beginning RE + Net Income - Dividends = Ending RE
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Appendix A: Double Entry Accounting Systems Rules of Debit and Credit Assets = Liabilities + S/H’s Equity - + - - + - + Increase with debits Increase with credits Increase with credits Normal debit balance Normal credit balance Normal credit balance (except Contra-Assets) Dividends + Revenues - Expenses + - - + - + Increase with debits Increase with credits Increase with credits Normal debit balance
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Ch 02 - LEARNING OBJECTIVE 1 Describe the basic elements of...

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