ACCT 2001 Lecture Notes - Lecture 2: Accounting Equation, Retained Earnings, Forgetting Curve
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Document Summary
Herman ebbinghause coined this term in 1885. Subjects memorize a list of meaningless, three letter words. Tracked how quickly his subjects forgot the words. Became known as the ebbinghaus or forgetting curve. Resources owned by the company= resources owed to creditors + resources owed to stockholders. Retained earnings: equity earned by the company. Revenues - expenses = net income (profit generated) Assets: economic resources presently controlled by the company that have measurable value and are expected to benefit the company by producing cash inflows or reducing cash outflows in the future. Liabilities: measurable amounts that the company owes to creditors. Stockholders" equity: owners" claim to the business resources. Retained earnings = earnings retained (not paid out) since the company was formed. Revenues: sales of goods or services to customers. Measured at the amount the business charges the customer. Expenses: the cost of doing anything necessary to earn revenues.