ACCT 101 Lecture Notes - Lecture 3: Retained Earnings, Accounting Equation, Financial Statement
28 Aug 2016
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Document Summary
Occurs when assets, liabilities, or stockholders" equity items change as a result of some economic event. Accounting equation: transaction analysis: the process of identifying the specific effects of economic events on the accounting equation, the accounting equation must always have balance. If an individual asset is increased, there must be a corresponding: decrease in another asset, or, increase in a specific liability, or, increase in stockholders" equity. Revenue is not recorded until the company has preformed the work. Dividends are a distribution of the company"s assets to its stockholders. The account: assets= liabilities + stockholders" equity. Two sides must equal each other: account: an individual accounting record of increases and decreases in a specific asset, liability, stockholders" equity, revenue, or expense item. Consists of: the tile of the account, a debit side (left) increases in cash, a credit side (right) decreases in cash. Referred to as a t-account: debit balance: the total of debit amounts exceeds the credits.
