ACC1200 Lecture Notes - Lecture 2: Ibm General Parallel File System, Photocopier, Accounting Equation
22 May 2018
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WEEK 2 – Business Transactions
RECAP:
Accounting equation:
Assets = Liabilities + Owner's Equity
Business transactions
• Process
• Relevant transactions and events that occurred
• General purpose financial statement (GPFS)
Business transactions include such events as:
• withdrawals of cash by the owner
• payments of wages and salaries
• earning of fees revenue
• purchase of an office photocopier
• purchase of stationery
• capital contribution
Difference between business event and transaction
- Event: A probable occurrence of resources between entity
- Transaction: an exchange of resources between an entity
Recognizing business transactions:
• Cash transaction: Involves the receipt or payment of cash
• Credit transaction: Does not involve cash immediately, but rather paid at a later stage
Business transactions need to be separate from personal affairs
1. Have separate accounts for business and private expenses
2. Keep all of your receipts
3. Separate credit cards
find more resources at oneclass.com
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Document Summary
Business transactions: process, relevant transactions and events that occurred, general purpose financial statement (gpfs) Business transactions include such events as: withdrawals of cash by the owner, payments of wages and salaries, earning of fees revenue, purchase of an office photocopier, purchase of stationery capital contribution. Event: a probable occurrence of resources between entity. Transaction: an exchange of resources between an entity. Recognizing business transactions: cash transaction: involves the receipt or payment of cash, credit transaction: does not involve cash immediately, but rather paid at a later stage. Shows the financial position of the business at the time of reporting. Revenue and expenses: income - expenses = profit/loss. Income is added as it increases oe (based on the conceptual framework: expenses decreases oe and thus is subtracted, reduce profit. For every transaction that occurs, there must be at least 2 transactions on the records and reports of the business to ensure that both sides are balanced.
