M1 Class Notes-2.xlsx - Module 1 Class Notes LO3 Business Activities LO 4.2 Accounting Equation Transaction get and give something in exchange of equal

M1 Class Notes-2.xlsx - Module 1 Class Notes LO3 Business...

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Module 1 Class NotesLO3 Business Activities & LO 4.2 Accounting EquationTransaction: get and give something in exchange of equal valueImportant: exchanges are recorded from the company’s (not the owner’s) pointRecording the get and the give will keep the accounting equation in balance:Chart of Accounts: List of account titles used by Hot Diggity Dogs, Inc.:Financing Activities – Investing Activities – Operating Activities – Hot Diggity Dog, Inc.'s May transactions:1Issued $1,000 of stock to its owners, Dee and Anita Dough, for cash2Received a $2,000, 12% cash loan from the bank on May 13Purchased a $1,200 hot dog cart with Cash on May 14Purchased 400 hot dogs for $800 to sell to customers56Paid $100 cash to its employee7Declared and paid a $20 cash dividend to owners8Adjusted for $20 depreciation of its equipment9A-EChart of Accounts:Accumulated DepreciationSold 300 hot dogs for $3 each. Record the sale (in Row 34) and cost of the sale (in Row 35)Adjusted for $20 interest owedon the $2,000, 12% Note Payable; the interest and principal are due June 30
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CashCommon StockCost of Goods SoldDepreciation ExpenseDividendsEquipmentInventoryInterest ExpenseInterest PayableNotes PayableSales RevenueWages ExpenseABCDE
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Practice, Practice, Practicet of view Assets =Liabilities +Shareholders’ EquityEconomic resourcescreditors’ claimsowners’ claims get: +give: +give: -get: -AssetsLiabilitiesShareholders’ Equity (SE)CashNotes PayableRevenue(+SE, give a good/sInventoryExpenses: (-SE, get a service oEquipmentCost of Goods Sold (-SE, use an asset)Accumulated DepreciationWages Expense (-SE, get a service)Interest Expense (-SE, get a service)Depreciation Expense (-SE, use an asset)Dividends(-SE, get back ownCommon Stock (+SE, give ownershobtaining resources from owners (equity financing) and/or creditors (debt financing)investing in long-term assets ( > 1 yr), land, buildings, equipment, computers, vehicles, etc., to set up its inprocess of creating value and delivering goods/services to customers profitablyAssets
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  • Summer '14
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