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ECON 2710 (4)


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York University
ECON 2710
Robert J E M Despatie

ECON 2710 INTRODUCTION TO FINANCIAL ACCOUNTING CHAPTER TWO: ANALYZING AND RECORDING TRANSACTIONS TYPES OF ACCOUNTS ACCOUNT: a detailed record of increases and decrease in a specific asset, liability, or equity item; each item is its own separate account; such as cash account, supplies account, equipment account etc. ASSET ACCOUNTS RECEIVABLES: amounts that businesses expect to receive in the future. ACCOUNTS RECEIVABLE: services performed or goods sold in return for promises to pay in the future; account is increased by services performed or good sold on credit and decreased by customer payments. NOTES RECEIVABLE: (PROMISSORY NOTES) unconditional written promise to pay a definite sum of money and/or on a set future date(s). PREPAID EXPENSES: payments made ahead of time for assets not to be used until later; such as prepaid rent and office supplies; as prepaid assets are used, the cost becomes an expense. LIABILITIES ACCOUNTS PAYABLES: amounts that businesses promise to pay later for an asset or service already received. ACCOUNTS PAYABLE: (to purchase on credit) promise to pay late for purchases of merchandise, supplies, equipment, or services. NOTES PAYABLE: formal recognition of promise to pay later by signing a promissory note. UNEARNED REVENUES: created when a customer pays in advance for product or services; account is satisfied upon delivery of product or service already paid for; such as magazine subscriptions, gift certificated etc. EQUITY ACCOUNTS OWNER CAPITAL: records owner’s investments; refers to sum of business resources owned by the owner. OWNER WITHDRAWALS: records sums of money taken out of the business by the proprietor or partners of the business for personal uses. REVENUE AND EXPENSES: such as sales earned, and advertising expenses. ACCOUNT BALANCES The balance of an account is determined by the difference between the debit and credit of the account; refers to the remaining amount of all transactions within the account. DEBIT: increases asset, expenses, and owner’s withdrawals accounts; decreases liability, owner’s capital
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