Ch02(6th)Post - Chapter F2 Chapter F2 BUSINESS ACTIVITIES...

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B B USINESS USINESS A A CTIVITIES CTIVITIES T T HE HE S S OURCE OF OURCE OF A A CCOUNTING CCOUNTING I I NFORMATION NFORMATION Chapter Chapter F2 F2
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2 - 2 1. Identify financing activities and explain why they are important to a business. 2. Demonstrate how accounting measures and records business activities. 3. Identify investing activities and explain why they are important to a business. 4. Identify operating activities and explain how they create profits for a company. Objectives Objectives
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2 - 3 5. Describe how financial reports summarize business activities and provide information for business decisions. Objectives Objectives
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2 - 4 Financing Activities Financing Activities A business is an organization that exists for the purpose of making a profit for its owners. Obj - 1
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2 - 5 A contribution by owners to a business, along with any profits that are kept in the business, is known as owners’ equity. Financing Activities Financing Activities Obj - 1
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2 - 6 An account is a record of the increases and decreases in the dollar amount associated with a specific resource or activity. Obj - 2
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2 - 7 Accounting transactions are descriptions of business activities (or events) that are measured in dollar values and recorded in accounts. Obj - 2
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2 - 8 Assets = Liabilities Owners’ Equity + The claims of creditors to a company’s resources Owners’ claims on the company’s assets The Accounting Equation The Accounting Equation Resources controlled by the business Obj - 2
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2 - 9 Financing from Owners and Creditors Exhibit 1 Exhibit 1 Obj - 1
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2 - 10 Financing Activities On January 2, 2007, Favorite Cookie Company received $10,000 from the company’s owners. On January 3, 2007, the company received $8,000 from the bank. Obj - 2
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2 - 11 ASSETS ASSETS = = LIABILITIES LIABILITIES + + OWNERS’  OWNERS’  EQUITY EQUITY Date Accounts Beginning Amounts 0 = 0 + 0 1/2 Cash 10,000 Contributed Capital 10,000 1/3 Cash 8,000 Notes payable 8,000 Ending Amounts 18,000 = 8,000 + 10,000 Financing Activities Cash refers to financial resources in the form of coins and currency, bank deposits, and short-term investments that can be converted easily into currency. Obj - 2
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2 - 12 ASSETS ASSETS = = LIABILITIES LIABILITIES + + OWNERS’  OWNERS’  EQUITY EQUITY Date Accounts Beginning Amounts 0 = 0 + 0 1/2 Cash 10,000 Contributed Capital 10,000 1/3 Cash 8,000 Notes payable 8,000 Ending Amounts 18,000 = 8,000 + 10,000 Financing Activities Contributed capital is an owners’ equity account and identifies amounts contributed to a company by its owners. Obj - 2
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ASSETS ASSETS = = LIABILITIES LIABILITIES + + OWNERS’  OWNERS’  EQUITY EQUITY Date Accounts Beginning Amounts 0 = 0 + 0 1/2 Cash 10,000 Contributed Capital 10,000 1/3 Cash 8,000 Notes payable 8,000 Ending Amounts 18,000 = 8,000 + 10,000 Financing Activities Notes payable is a liability account used to identify amounts a company owes to creditors with whom a formal agreement (a note) has been signed. Obj - 2
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Ch02(6th)Post - Chapter F2 Chapter F2 BUSINESS ACTIVITIES...

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