ACIS+2115+Chapter+2+Lecture+Fall+2009

ACIS+2115+Chapter+2+Lecture+Fall+2009 - ACIS 2115 - Chapter...

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Unformatted text preview: ACIS 2115 - Chapter 2 Reporting Investing and Financing Results on the Balance Sheet Balance Sheet Accounts Assets: in order of how fast they will be used up or can be turned into cash. Current Assets Cash 15,000 $ Supplies 500 Total current assets 15,500 Equipment 30,000 Total assets 45,500 $ Current Liabilities Accounts payable 500 $ Total current liabilities 500 Notes payable 20,000 Total liabilities 20,500 Contributed capital 25,000 Retained earnings- Total stockholders' equity 25,000 Total liabilities and stockholders' equi 45,500 $ Hokie Printshop Balance Sheet At August 31, 2008 Assets Liabilities Stockholders' Equity Liabilities: in order of how soon they will be paid or satisfied. Learning Objective 1 Explain and select common balance sheet account titles. Balance Sheet Accounts Some common balance sheet accounts. Chart of Accounts The chart of accounts is a summary of all account names (and corresponding account numbers) used to record financial results in the accounting system. Different companies assign different numbers to accounts. Learning Objective 2 Apply transaction analysis to business transactions. The Accounting Cycle (1) Analyze (2) Record (3) Summarize Step 1: Analyze Transaction A transaction is an exchange or an event that has a direct economic effect on the assets, liabilities, or stockholders equity of a business. Step 1: Analyze External Exchanges Exchanges involving assets, liabilities, and stockholders equity that you can see between the company and someone else. Internal Events Events occurring within the company, for example, using some assets to create an inventory product. Transaction Analysis Two simple ideas are used when analyzing transactions: Duality of Effects Every transaction has at least two effects on the basic accounting equation. A = L+ SE Remember that assets must equal liabilities plus stockholders equity for every accounting transaction. Transaction AnalysisExamples Pay cash for supplies. Duality of Effects 1. Company gives Cash. 2. Company receives Supplies. A = L+ SE Cash (an asset) decreases. Supplies (an asset) increases . Assets = Liabilities + Stockholders' Equity- Cash No change No change + Supplies Transaction AnalysisExamples Buy supplies on credit. Duality of Effects 1. Company gives Accounts Payable. 2. Company receives Supplies. A = L+ SE Accounts Payable (a liability) increases. Supplies (an asset) increases. Assets = Liabilities + Stockholders' Equity + Supplies + Accounts Payable No change Transaction AnalysisExamples Pay cash for amount owed. Duality of Effects 1. Company gives Cash. 2. Company eliminates Accounts Payable. A = L+ SE Cash (an asset) decreases. Accounts Payable (a liability) decreases....
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This note was uploaded on 10/14/2010 for the course ACCT 2115 taught by Professor K during the Spring '10 term at Virginia College.

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ACIS+2115+Chapter+2+Lecture+Fall+2009 - ACIS 2115 - Chapter...

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