AC 210 Lecture Notes - Lecture 2: A Question Of Balance, Accounting Equation

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Chapter 2: the balance sheet: a company always documents its activities, picture the documented activity, a company always receives something and gives something, na(cid:373)e (cid:449)hat"s e(cid:454)(cid:272)ha(cid:374)ged, a dollar amount is determined for each exchange, analyze the financial effects. Transaction & other activities: e(cid:454)te(cid:396)(cid:374)al e(cid:454)(cid:272)ha(cid:374)ge: i(cid:374)(cid:448)ol(cid:448)i(cid:374)g assets, lia(cid:271)ilities, a(cid:374)d sto(cid:272)kholde(cid:396)s" e(cid:395)uit(cid:455) that (cid:455)ou (cid:272)a(cid:374) see between the company and someone else. Step 1: analyze transaction: a name is given to each item exchanged account titles, the (cid:272)ha(cid:396)t of a(cid:272)(cid:272)ou(cid:374)ts is tailo(cid:396)ed to ea(cid:272)h (cid:272)o(cid:373)pa(cid:374)(cid:455)"s (cid:271)usi(cid:374)ess. Titles can be common or unique to the company. Step 2 and 3: record and summarize: one way to record and summarize the financial effects of transactions would be to enter your understanding of their effects into a spreadsheet, most companies use computerized systems.

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