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Unformatted text preview: mutual benefit or profit for both parties involved. The properties exchanged are goods (called inventory) or services or both. • Buying a truck on credit • Paying cash to employees • Doing a job for a customer • Building a table • The owners investing cash • The owners withdrawing cash • Collecting cash on account 6. The double entry concept is the concept that each transaction affects at least two account balances. That way the accounting system stays in balance after the event is recorded and posted. The accounting system must always be in balance. If the debits do not equal the credits there is an error somewhere that will have to be fixed before reports can be prepared. There are two purposes, or reasons, to prepare a trial balance. First, it organizes all of the end of period balances which facilitates preparing financial statements. Second, it proves that the debits equal the credits. 7. Under construction....
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This note was uploaded on 06/14/2011 for the course ACG 2021 taught by Professor Larson during the Spring '08 term at Valencia.
- Spring '08
- Balance Sheet