22107 Lecture Notes - Lecture 3: Accounting Equation, The Ledger, General Ledger

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20 Jul 2018
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Accounting transactions are any economi(cid:272) e(cid:448)e(cid:374)t that affe(cid:272)ts a (cid:272)o(cid:373)pa(cid:374)(cid:455)(cid:859)s assets, lia(cid:271)ilities, o(cid:396) equity at the time of the event. Accounting transactions between a company and an external party (for example, an equipment purchase or issuance of shares) are external transactions, while transactions within a company (the consumption of supplies) are internal transactions. Chart of accounts is the list of accounts that a company uses to capture its business activities. If there is any change in one part of the fundamental accounting equation must be accompanied by a second change to another part: For example, suppose that a transaction increases an asset account. For the equation to stay in balance, the transaction must also either decrease another asset account, or increase a liability or equity account. This means that every accounting transaction must affect at least two accounts. This is known as dual nature of accounting. *have a look at tra(cid:374)sactio(cid:374) a(cid:374)alysis it is displays (cid:858)+(cid:859) a(cid:374)d (cid:858) (cid:859) *

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