Chapter 2 Study Outline

Chapter 2 Study Outline - 1 CHAPTER 2 OUTLINE Analyzing...

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1 CHAPTER 2 –OUTLINE Analyzing Business Transactions Objective 1: Explain how the concepts of recognition, valuation, and classification apply to business transactions and why they are important factors in ethical financial reporting. 10. Before recording a business transaction, the accountant must determine three things:0 a0. Recognition b0. Valuation c0. Classification 20. Recognition point.0 a0. Some business events are not recordable transactions. b0. Other business events are recordable transactions. 30. Cost principle (exchange price) 40. Ethics Objective 2: Explain the double-entry system and the usefulness of T accounts in analyzing business transactions. 50. Account 60. T account (3 parts)0 a0. b0. c0. 70. Rules of debit and credit:0 a0. Increases in assets b0. Decreases in assets c0. Increases in liabilities and owner’s equity d0. Decreases in liabilities and owner’s equity e0. Revenues and capital invested into the business increase owner’s equity f0. Expenses and withdrawals decrease owner’s equity
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Chapter 2 Study Outline - 1 CHAPTER 2 OUTLINE Analyzing...

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