MGMT 1A Lecture Notes - Lecture 2: General Ledger, Income Statement, Acronym
Document Summary
Chapter 2 [course reader: page 75 - page 116] Basic accounting equation: assets = liabilities + owner"s equity: assets are resources owned by a business. Things of value for production or exchange: liabilities are claims against assets. Accrual basis of accounting: realistic picture of pro t performance. Cash basis of accounting: unrealistic picture of pro tability, ignores uncollected revenue. Financial statements: present revenue and expenses and resulting net income of a company over a speci c time frame. Account: an individual accounting record of increases and decreases in a speci c asset, liability, or owner"s equity item: title (of the account, debit [dr] (left side / assets) + Increase in assets, decrease in liabilities or equities: credit [cr] (right side / liabilities + owner"s equity) - Decrease in assets, increase in liabilities and equities: debits must equal credits. Journal entry example and debit / credit diagram (t-accounts) [page 79-81]
