Recording Business Transactions

Recording Business Transactions - RECORDING BUSINESS...

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1 RECORDING BUSINESS TRANSACTIONS— the mechanics Account —smallest unit of accounting; some typical accounts that are summarized into the accounting equation (& balance sheet) ASSETS = LIABILITIES Cash Accounts Payable Accounts Receivable Wages Payable Inventory Accrued Expenses Prepaid Expenses Unearned Revenue Equipment Notes Payable Buildings Bonds Payable Patents, Goodwill & other intangibles + STOCKHOLDERS’ (OWNERS’) EQUITY Contributed Capital Retained Earnings Total Assets = Revenue accounts (e.g. Sales Revenue, Service Revenue) and Expense accounts (e.g. Wage Expense, Rent Expense, Accounting & Legal Fee Expense) are sub-accounts of Retained Earnings (Stockholders’ Equity). They are kept separate during the year on the income statement and, at the end of the year, when the net profit or loss is determined, the net profit or loss is closed out to Retained Earnings. Profits increase Stockholders’ Equity, so if a company experiences a net profit for the year, the net profit amount is credited to Retained Earnings. Conversely, if the company
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This note was uploaded on 02/03/2011 for the course MGA 201 taught by Professor Anderson during the Fall '08 term at SUNY Buffalo.

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Recording Business Transactions - RECORDING BUSINESS...

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