acct 211 - ch.3 notes

acct 211 - ch.3 notes - Ch. 3 Notes (Page 1) THE ROLE OF...

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Ch. 3 Notes (Page 1) THE ROLE OF ACCOUNTING RECORDS : 1. establishes accountability for assets and transactions 2. keeps track of routine business transactions 3. obtains detailed information about a particular transaction 4. evaluates efficiency and performance within a company 5. maintains evidence of company’s business activities Accounts : individual records showing increases and decreases General Ledger : accounting record that keeps the entire group of accounts “T - Account” Debit = left side (increases to cash) Credit = right side (decreases to cash) Always enter debits first and indent credits Journal --- then general ledger (T accounts) NET INCOME : increase in OE from the profits of the business
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Ch. 3 Notes (Page 2) A = L + OE OE = capital stock + retained earnings Retained earnings = Revenues - Expenses - Dividends Revenue = increase in retained earnings Expenses = decrease in retained earnings INCOME STATEMENT : profit at a set point in time TIME PERIOD PRINCIPLE : provide users of financial statements with timely information, net income is measured in
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acct 211 - ch.3 notes - Ch. 3 Notes (Page 1) THE ROLE OF...

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