BUS 020 Lecture Notes - Lecture 1: Accounts Receivable, Retained Earnings, Accounts Payable
2 May 2017
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Document Summary
Document from an event transaction analysis (analysis) recording in a spreadsheet draft financial statements: every event gets recorded one by one. Balance sheet: equity: paid- in on stock, retain earnings, current assets: Income statement: sales revenue: cost of goods sold, gross profit: operating expenses. If none is changed immediately, the event is considered executory (i. e. conditional upon future events) and is not. Identity balance sheet items which have been changed by the event. Balancing requires at least two, equal changes or else recognition cannot be given. Investing: firm buys land with cash: -10 cash, +10 non current asset land, firm signs lease for equipment: + noncurrent; + ltdebt, firm sells land for cash +12 cash; -10 liabilites, +2 gain retained earnings. Operating: firm buys inventory on account +3 non cash asset=+3 account payable (cliab, firm sells inventory on account -3 non cash asset= -3 cost of goods sold expense.
