U2 L5 Expanded Ledger - Expanded Ledger In recording...

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Expanded Ledger In recording transactions so far, we have found that the capital account (equity) has been affected by the following types of transactions: owner makes an investment in the business (capital is credit ed – increased ) owner withdraws assets from the business (capital is debit ed – decreased ) the business makes a sale of goods or services (capital is credit ed – increased ) the business incurs an expense (capital is debit ed – decreased ) a gain or loss occurs from the sale of an asset (capital is credit ed or debit ed) Because there are so many types of transactions that would occur in the capital account, it may become difficult for an owner or manager to track sales or individual expenses from one period to the next. As a result, we will introduce three new types of equity accounts: revenue accounts, expense accounts, and the drawings account, and thus, expand the ledger . The purpose of expanding the ledger to include new equity accounts is to provide management with important information about the progress of the company. By
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This note was uploaded on 07/15/2011 for the course AFM 102 taught by Professor Aa during the Summer '07 term at Court Reporting Institute of Dallas.

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U2 L5 Expanded Ledger - Expanded Ledger In recording...

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