ACU 1 - UNIT 1 I. ASSETS ITEMS OF VALUE THE ACCOUNTING...

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UNIT 1 ASSETS THE ACCOUNTING EQUATION LIABILITIES = OWNER'SEQUITY I. ITEMS OF VALUE WHAT IS OWED NET WORTH II. DEFINITIONS ACCOUNT- a storagearea for financialinformation. DEBIT- left side of an account. T ACCOUNT- a simplifiedaccount. CREDIT- right side of an account. III. BALANCE SHEET ACCOUNTS ASSETS are items of value. CAPITAL is the Owner's Equity account for sole proprietorships and partnerships. LIABILITIES are amounts owed. COMMON STOCK is the primary account for tracking the invested equity of a corporation. OWNER'S EQUITY is the net worth of a business. RETAINED EARNINGS is the account used to store income earned but not distributed by a corporation. IV. DEBITS AND CREDITS Please relate the definitions in Part III to the schematic below. Note the accounting equation has been rewritten to better explain debits and credits. ASSETS = LIABILITIES DR. I CR. DR. I CR. + - - + The DOUBLE ENTRY system of debits and credits facilitatesthe increasing and decreasing of the amounts stored in the Balance Sheet Accounts. The above
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This note was uploaded on 10/27/2009 for the course MBA 1918272 taught by Professor Peter during the Fall '09 term at Aberystwyth University.

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ACU 1 - UNIT 1 I. ASSETS ITEMS OF VALUE THE ACCOUNTING...

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