Chapter_One_(2)

Chapter_One_(2) - 1 2009/9/7 1 Chapter 1 Accounting in...

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Unformatted text preview: 1 2009/9/7 1 Chapter 1 Accounting in Action (Lesson 2) Chapter 1 Chapter 1 Accounting in Action Accounting in Action (Lesson 2) (Lesson 2) 2009/9/7 2 The Basic Accounting Equation Assets Assets Assets Liabilities Liabilities Liabilities Stockholders’ Equity Stockholders Stockholders ’ Equity Equity = + Provides the underlying framework for recording and summarizing economic events. Assets are claimed by either creditors or owners. Claims of creditors must be paid before ownership claims. 2009/9/7 3 The Basic Accounting Equation Assets Liabilities & Owners' Equity Cash 22,500 $ Liabilities: Notes receivable 10,000 Accounts receivable 60,500 Accounts payable 36,000 Supplies 2,000 Salaries payable 3,000 Land 100,000 Total liabilities 39,000 $ Building 90,000 Owners' Equity: Office equipment 15,000 Capital stock 150,000 Assets are economic resources that are owned by the business and are expected to bring future services or benefits. Assets are economic resources that are owned by the business and are expected to bring future services or benefits. Assets Assets 2009/9/7 4 The Basic Accounting Equation Notes payable 41,000 $ Accounts payable 36,000 Salaries payable 3,000 Liabilities: Liabilities are debts and obligations that represent negative future cash flows for the enterprise. Liabilities are debts and obligations that represent negative future cash flows for the enterprise. Liabilities Liabilities 2 2009/9/7 5 The Basic Accounting Equation Building Office equipment Paid-in Capital 150,000 Retained earnings 70,000 Stockholders' Equity: Stockholders’ equity represents the owners’ claims on the total assets. It is often referred to as residual equity. Stockholders’ equity consists of (1) paid-in capital and (2) retained earnings. Stockholders’ equity represents the owners’ claims on the total assets. It is often referred to as residual equity. Stockholders’ equity consists of (1) paid-in capital and (2) retained earnings ....
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This note was uploaded on 02/16/2011 for the course ACCT 233 taught by Professor 123 during the Spring '11 term at CUHK.

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Chapter_One_(2) - 1 2009/9/7 1 Chapter 1 Accounting in...

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