RSM219H1 Chapter Notes - Chapter 3: Retained Earnings, Accounting Equation, In Step

• School: UTSG
• Department: Rotman Commerce
• Course: RSM219H1
• Professor: Alexander Edwards

Document Summary

Accounting information system: the system of collecting and processing transaction data and communicating financial information to decision-maker is known as the accounting information system. An accounting system begins with determining what is relevant transaction data should be collected and processed. Only those events what caused change in assets, liabilities, and shareholder"s equity should be recorded. Accounting transaction: occurs when assets, liabilities, or shareholder"s equity items change as a result of some economic events. In order to balance the accounting equation, each transaction will have a dual (double-sided) effect on the equation. For example, if there is an increase in assets, there has to be an increase in liabilities or shareholder"s equity or both by the same amount, in order to balance the accounting equation. * read all the transactions in this section for a better idea * Account: is an individual accounting record of increases and decreases in a specific assets, liability or shareholder"s equity item.