BUSN1001 Lecture Notes - Lecture 2: The Ledger, Accounting Equation, Accounts Receivable
Document Summary
Business events: occurrences that will probably affect the business in some way, not recorded as business transactions until an exchange of goods occurs between an entity and an outside entity. Asset: resources controlled by entity, from past events, except future economic benefits. Liability: external sources of funds for the resources controlled by the entity e. g. loan from bank. Internal sources of funds (from owners) for resources controlled by entity: contributions (increase), drawings (decrease), income (increase), expense (decrease e. g. wage, internet) A transaction will always have two affects on this equation: If asset increases another asset will decrease, if liability decreases, equity will increase paying off loan, conversion of debts to equity. Expanded: assets = liabilities + equity + income expenses. Firm purchases a new ipod for and pays by cash. Firm sends an invoice to tassie tennis for providing tennis coaching services totalling .