ACCT 284 Chapter Notes - Chapter 2: Financial Statement, Retained Earnings, Historical Cost

• School: Iowa State University
• Department: Accounting
• Course: ACCT 284
• Professor: All

Document Summary

To provide useful economic information to external parties for decision making and for assessing future cash flows. Elements of balance sheetassets: probable future economic benefitsowned by the entity from past transactions. liabilities: debts or obligations from pasttransactions to be paid with assets or services. stockholders" equity: financing provided byowners and operations. relationships of 3 basic equations. Listing of all account names and corresponding account numbers used in an accounting system. Classified balance sheet: assets, current assets, investments, property, plant and. Equity: common stock, paid in excess, retained earnings, accumulated other comprehensive income. An event that is recorded as part of the accounting process. All transactions are the result of past events. The process of studying a transaction to determine its economic effect in terms of the accounting equation. * every transaction affects at least two accounts. * the accounting equation must remain in balance after each transaction.