Acc200Day03 - The Bookkeeping/Accounting The...

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Unformatted text preview: The Bookkeeping/Accounting The Bookkeeping/Accounting Process Process Transactions are economic interchanges between entities that are accounted for and reflected in financial statements. Borrow cash from the bank A A = = L L + + OE OE The Balance Sheet Equation—A The Balance Sheet Equation—A Mechanical Key Mechanical Key A A = = L L + + PIC PIC + + RE RE BEG BEG + + R R -- E E The basic accounting equation can be expanded to include revenues and expenses. = Liabilities + Transaction Cash + Accounts Receivable + Equipment = Notes Payable + Paid-in Capital + Retained Earnings a b c d e f Total Assets Owners' Equity Let’s see how transactions affect accounting equation (A=C) . Transactions a. The owners invested $2,000. b. The company borrowed $6,000 from a bank. c. Equipment costing $10,000 was purchased for $2,000 cash and signing a note payable for $8,000. d. Equipment that cost $3,000 was sold for $3,000. The $3,000 will be received within 30 days. e. The company provided services for $8,000 and received cash. f. Wages of $2,000 were paid in cash. = Liabilities + Transaction Cash + Accounts Receivable + Equipment = Notes Payable + Paid-in Capital + Retained Earnings + Revenues- Expenses a 2,000 2,000 b 6,000 6,000 c (2,000) 10,000 8,000 d 3,000 (3,000) e 8,000 8,000 f (2,000) 2,000 Total 12,000 + 3,000 + 7,000 = 14,000 + 2,000 + + 8,000 - 2,000 6,000 Assets Owners' Equity Revenues 8,000 $ Expenses 2,000 Net Income 6,000 $ Income Statement Transaction Cash + Accounts Receivable + Equipment =...
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This note was uploaded on 10/16/2010 for the course ACCY Accy 200 taught by Professor Xxx during the Spring '10 term at University of Illinois at Urbana–Champaign.

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Acc200Day03 - The Bookkeeping/Accounting The...

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