MGMT 20000 Lecture 2: Chaper 1 Part 2

• School: Purdue University
• Department: Management
• Course: MGMT 20000
• Professor: Frank Kane

Document Summary

Accounting systems and the storage of financial information. Accounting equation (relationship between assets, liabilities, and equity) Assets (resources) =liabilities (creditors claim) + equity (owner"s claim)- (claims to resources) Asset-benefit future operations ( cash, inventory, supplies, accounts receivable, buildings and equipment) Equity-sell shares of company to see ownership of company. Practice using accounting systems and how financial information is stored in accounts. 10 purdue students form a corporation investing /each and receive 10 shares of common stock (total shares issued 100) Inventory + cash (assets) = creditors (liabilities) + owners" (equity) Supplier provides of materials (inventory) to produce a product on credit (new corporation is not required to pay cash until next month). Inventory + cash (assets) = creditors + owner"s. The new corporation hires employees to assist in the office. Employees have earned of wages that will be paid next week. Profit is often referred to as income or earnings.