Class _1-The Accounting Equation & Elements of FS

Class _1-The Accounting Equation & Elements of FS -...

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The Accounting Equation Elements of Financial Statements Assets = Claims Liabilities + Equity Common Stock + Retained Earnings (Contributed Capital) Distributions Revenues - Expenses Net Income Gains Losses These two elements will be discussed in a later chapter
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The Accounting Equation Elements of Financial Statements Assets = Claims Liabilities + Equity Common Stock + Retained Earnings Distributions Revenues - Expenses Net Income Personal Example: Purchase car that costs $10,000. Borrowed $8,000 from the bank. Parents gave $2,000 cash down payment as investment. Assets = Liabilities + Equity 10,000 8,000 2,000
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The Accounting Equation Assets = Claims Liabilities + Equity
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Unformatted text preview: Common Stock + Retained Earnings Distributions Revenues-Expenses Business Example: Bakery (assume all events are cash transactions) Event 1 - Weathly uncle invests $20,000 Net Income Event 2 - Borrow $10,000 from local bank Event 3 - Purchase delivery truck for $15,000. Sticker price was $16,000. Event 4 - Deliver wedding cake. Collect $100 delivery fee, incur delivery expenses of $50. Balance Sheet Income Statement Assets = Liabilities + Common Stock + Retained Earnings Revenues-Expenses = Net Income (Loss) Cash Truck 1 20,000 20,000 - 2 10,000 10,000 - 3 (15,000) 15,000 - 4a 100 100 100 100 4b (50) (50) 50 (50) Ending Balances 15,050 15,000 10,000 20,000 50 100 50 50...
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Class _1-The Accounting Equation & Elements of FS -...

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