basics-of-accounting-information-processing

For expenses the lower set of balance sheets on the

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: of transactions that can occur, and each and every transaction can be described in terms of its impact on assets, liabilities, and equity. What is important to know is that no transaction will upset the fundamental accounting equation of assets = liabilities + owners’ equity. Download free eBooks at bookboon.com 17 Services to a customer on account: Basics of Accounting & Information Processing How Transactions Impact the Accounting Equation Services to a customer on account: E DELWEISS CORPORATION Balance Sheet December 31, 20X3 (before indicated transaction) Assets * C ash A ccounts receivable I nventories L and B uilding * E quipment O ther assets Total assets Liabilities A ccounts payable L oans payable Total liabilities Stockholders’ equity C apital stock R etained earnings Total stockholders’ equity Total liabilities and equity EDELWEISS CORPORATION Balance Sheet December 31, 20X3 (after indicated transaction) $ 35,000 40,000 35,000 125,000 400,000 280,000 1 0,000 $925,000 $ 5 0,000 1 55,000 $120,000 6 00,000 $205,000 7 20,000 $925,000 + $5,000 + $5,000 + $0 + $5,000 + $5,000 A ssets C ash A ccounts receivable I nventories L and B uilding E quipment O ther assets Total assets Liabilities A ccounts payable L oans payable Total liabilities Stockholders’ equity C apital stock R etained earnings Total stockholders’ equity Total liabilities and equity $ 35,000 45,000 35,000 125,000 400,000 280,000 1 0,000 $930,000 $ 5 0,000 1 55,000 $120,000 6 05,000 $205,000 7 25,000 $930,000 Pays expenses: Pays EDELWEISS CORPORATION Balance Sheet December 31, 20X3 expenses: (before indicated transaction) Assets C ash A ccounts receivable I nventories L and B uilding E quipment O ther assets * Total assets Liabilities A ccounts payable L oans payable * Total liabilities Stockholders’ equity C apital stock R etained earnings Total stockholders’ equity Total liabilities and equity EDELWEISS CORPORATION Balance Sheet December 31, 20X3 (after indicated transaction) $ 35,000 - $3,000 45,000 35,000 125,000 400,000 280,000 1 0,000 $930,000 - $3,000 $ 5 0,000 1 55,000 $120,000 6 05,000 $205,000 + $0 - $3,000 7 25,000 - $3,000 $930,000 A ssets C ash A ccounts receivable I nventories L and B uilding E quipment O ther assets Total assets Liabilities A ccounts payable L oans payable Total liabilities Stockholders’ equity C apital stock R etained earnings Total stockholders’ equity Total liabilities and equity $ 32,000 45,000 35,000 125,000 400,000 280,000 1 0,000 $927,000 $ 5 0,000 1 55,000 $120,000 6 02,000 $205,000 7 22,000 $927,000 Download free eBooks at bookboon.com 18 Basics of Accounting & Information Processing How Transactions Impact the Accounting Equation 4.6 Distinguishing Between Revenue and Income In day-to-day conversation, some terms can often be used casually and without a great deal of precision. Words may be treated as synonymous, when in fact they are not. Such is the case for the words “income” and “revenue.” Each term...
View Full Document

Ask a homework question - tutors are online