ACCT 201 Lecture 3: Chapter 3 Notes (Accounting Information Systems)
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Document Summary
Processing transactions (basic units processed by the accounting information system) Transactions: economic events that require recording in the financial statements. Assets, liabilities, and stockholders" equity items change as a result of some. Event: * purchase * discuss guided trip * pay rent. External events: between the business and another party. The process of identifying the specific effects of economic events on the accounting equation. To analyze transactions, we expand the basic accounting equation. Common stock: investment by owners; externally generated value. Retained earnings: all earnings over life of the company less payment to owners; internally generated value. Net income: profits earned - dividends: payments to owners. Beginning retained earnings + net income - dividends. Revenue: sales of goods and services expenses: cost of producing revenue. The accounting information system uses accounts to accumulate the dollar. All increases in cash on the left. All decreases in cash on the right. All increases in liabilities / equity on the right.