CH 2

basic acct equation

A=L+SE

an exchange of only a promise is not an a____ t____, _____ _____ required.

acct transaction no entry required

assest are: R____ & Future E___ B___
name some assets

Resources & Future Economic Benefits
Cash, A/R, Supplies, equip, & more

liability are ___ by a business
name 3 liabilities

owned by a business
accounts payable, wages payable, notes payable, & more

stockholders’ equity

Amount:
- Invested: Commons Stock
- Reinvested: Retained Earnings

cost principle

asset & liab. recorded at original cost

transaction d___ & m____ effect to a business

direct & measurable

D____ of effects
Every transaction has at least ____ ____.

Duality of effects
A=L+SE
Every transaction has at least 2 effects.

Accts name (Correct order)

Cash

Supplies

Equip

A/P

N/P

CS

RE

signs a $100k contract

not a transaction

no journal entry

a promise only made

analyse through the acct equation:

equip purchase $500k

paid cash $200k
promissory note ?

A=L+SE
A: (200k) cash +500k Equip

SE: 300k NP

debit only means

left

credit only mean

right

debit/credit framework

A: D+ C-
L: D- C+
SE: D- C+

debt has priority over ____.
promise of an exchange not a ____
d-c frame work

equity
transaction
debit/credit frame work

A: D+ C-
L: D- C+
SE: D- C+

indicate normal balance (nb)

A: D+
L: C+
SE: C+

company issues common stock of $10,000
all 3 steps

1. analyze (a: 10k / se: 10k)

2. journalize (cash - d - 10k / cs - c - 10k)

3. summarize (cash +10k left / CS-SE 10 + right)

classified balance sheet

shows subtotal
current asset/liab>under 1 year
noncurrent asset/liab>over 1 year

list in order of ____ and _____.

liquidity & maturity

PPE

property, plant, equip.

1st asset

cash

BS is for a ___ in time.

point

1. IS

2. SRE

3. SCF

___of time.

period of time