33:010:325 Lecture Notes - Lecture 3: Matching Principle, Deferred Income, Deferral
13 Oct 2017
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Document Summary
Accounting cycle = 9 step process by which company records transactions & summarizes them in nancial statements. Accounting = recording economic transactions: transaction = econ. event that involves change in asset, liability, or se that companies record in acctg records, acctg equation: assets = liabilities + se. Assets = econ. resources that will help you make 16563 in the future. Liabilities: sacri ces of econ. bene ts arising from something you owe currently. Se: aka net assets: contributed capital (stock), retained earnings, accumulated other comprehensive income, se also known as residual ownership (everything you own - everything you owe) Double-entry system: all transactions affect at least 2 accounts; acctg equation will always balance. Gains: 16563 in ow from activities outside normal course of bus. Expenses: 16563 out ow to keep bus. going. Losses: decreases in equity from activities outside normal bus. Dividends are not an expense (they"re a return on investment)
