3 types of business activities: financing, borrowing money b, dividends. Investing: purchase of resources (assets) a company needs to operate a. i. Computers, trucks, buildings: operating, buying and selling products. Retained earnings statement- retained earnings + net income dividends. The balance sheet- presents a snapshot at a point in time. Current assets- company expects to convert to cash within one year. Operating cycle- average time it takes from the purchase of inventory to the collection of cash. Long term investments- investments in stocks and bonds, investments in long term assets land or buildings that aren"t currently being used in operating activities. Liquidity- ability to pay obligations expected to become due within the next year. Liquidity ratio- measure short-term ability to pay maturing obligations and to meet unexpected need for cash. Current ratio = current assets / current liabilities. Stockholders equity- debit to decrease, credit to increase. Posting- the process of transferring amounts from the journal to the ledger accounts.