AFM123 Lecture Notes - Lecture 2: Business Cycle, Accounting Equation

• School: University of Waterloo
• Department: Accounting & Financial Management
• Course: AFM123
• Professor: David Lin

Document Summary

Lecture 2 - reporting on the balance sheet. Shows subtotals for current assets and liabilities (within a year/ business cycle) Shows whether or not assets are able to pay liabilities. Balance sheets show what a company owns and owes. Every transaction has 2 effects on accounting equation. A = l + se must hold true for all transactions. A chart of account summarizes all account names used. Assets can be bought w/ cash or account. Event that has financial effect on a=l +se.