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Lecture 1

MGMT 1A Lecture Notes - Lecture 1: Accrual, Deferral, Balance SheetPremium

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MGMT 1A Lecture 1 Notes - Introduction / Syllabus Overview
Credits and Debits
The true definition is opposite from the way we use it in the world
Credits are used for liabilities and equity
Debits are used for assets
First financial statement is income statement
Income statement uses not a cruel, but accrual accounting
Accrual accounting means: revenue is recognized when it is earned
Revenue is earned for goods, when you ship the goods
Revenue is earned for services, when you perform the services
Debits on the left
Debits increase inventory
Debits increase cash
Debits increase PP&E
Debits increase all assets
Asset: something that provides you with future economic benefit
Debits increase receivables
Receivable is an asset, money that someone owes you
Debits decrease liabilities
Credits on the right
Credits decrease inventory
Credits decrease cash
Credits increase liabilities
Credits increase payable (any type of payable)
Payable is a liability, money that you owe
Credits increase owners equity
Assets = Liabilities + Owners Equity (Equity)
Liability: something you owe
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