MGMT 1A Chapter Notes - Chapter 1.3: Accounts Payable, Tomato Paste, Cash Register
Document Summary
Assets = the resources a business owns. Liabilities & stock = the rights or claims against these resources. Stockholders" equity = claims of owners equity (asset = liabilities + stockholders" equity) Basic accounting equation : assets must equal the sum of liabilities and stockholders" first if a business is liquidated. Equation applies to all economic entities regardless of size, nature of business, or form of business organization provides underlying framework for recording and summarizing economic events. Business uses its asses in carrying out such activities as production and sales. The capacity to provide future services or benefits. That service potential or future economic benefit eventually results in cash inflows. Ex. campus pizza owns a delivery truck that provides economic benefits from (receipts) delivering pizzas and (of course) cash. Liabilities : claims against assets (that is, existing debts and obligations) These economic activities result in payables of various sorts. Businesses of all sizes usually borrow money and purchase merchandise on credit.
