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UH / Accounting / ACCT 2331 / What does it mean when total of debits and credits are equal?

What does it mean when total of debits and credits are equal?

What does it mean when total of debits and credits are equal?

Description

School: University of Houston
Department: Accounting
Course: Accounting Principles 1 - Financial
Professor: Kiran parthasarathy
Term: Summer 2015
Tags: Accounting
Cost: 25
Name: ACCT 2331, Week 2 Notes
Description: Equity, types of businesses, clicker questions (a couple will be on the exam)
Uploaded: 01/25/2017
4 Pages 34 Views 1 Unlocks
Reviews


● Equity is called stockholder’s equity in a public company


What does it mean when total of debits and credits are equal?



­ 5 Types of Accounts

Balance Sheet

1. Assets (have debit balances)

2. Liabilities

3. Owner’s equity

Income Statement

4. Revenues

5. Expenses

● Total debits should equal total credits

○ Trial balance: a list of all accounts and their balances at a 

particular date

■ Only for internal use

■ Not required to follow an order of listing

● Assets equal liabilities and owner’s equity

● Accounting systems record transactions

● Service revenue???

○ EX­ No personal expenses should be reported in a medical 

practice


What is the accounting equation used for?



Two Types of Businesses

1. Services. EX­ medical practice

2. Goods. EX­ grocery store

● Earnings process complete for the sale of a good is when the buyer takes  possession of the good or service

● Realization is complete when cash or cash equivalent is taken

○ Can’t record the sale until cash is received

● Revenue recognition – both earned and realized or realizable 

● Matching – recognize expenses in the same period that the related revenue is  reported (record it when the cost is incurred) Don't forget about the age old question of What is the difference between structural and constitutional isomers?

● Credits and debits are used by non­profit, government companies,  ○ Both are used everywhere 


What are the four criteria for revenue recognition?



Don't forget about the age old question of What is the meaning of laclere?

○ Debits on left, credits on right 

Clicker Questions 

1. Rent expense would appear in a company’s income statement 

2. The balance sheet reflects that ASSETS = LIABILITIES + STOCKHOLDER’S  EQUITY

3. EX­ Cash collected from customers is Operating Activity in the Statement of  Cash Flows

4. Auditors are independent parties that help to ensure management has  appropriately prepared the company’s financial statements. Don't forget about the age old question of What is the definition of homo erectus?
If you want to learn more check out What is the meaning of bulk flow in biology?

a. Investors and creditors in their decisions by adding credibility to  the financial statements.

5. Periodicity indicates that the life of a company can be divided into artificial time  periods for periodic reporting

● Equity is called stockholder’s equity in a public company

­ 5 Types of Accounts

Balance Sheet

1. Assets (have debit balances)

2. Liabilities

3. Owner’s equity

Income Statement

4. Revenues

5. Expenses

● Total debits should equal total credits

○ Trial balance: a list of all accounts and their balances at a  Don't forget about the age old question of How does the united states protect human rights?

particular date

■ Only for internal use

■ Not required to follow an order of listing

● Assets equal liabilities and owner’s equity

● Accounting systems record transactions

● Service revenue???

○ EX­ No personal expenses should be reported in a medical 

practice

Two Types of Businesses

1. Services. EX­ medical practice We also discuss several other topics like What are the three ways to test a moral argument?

2. Goods. EX­ grocery store

● Earnings process complete for the sale of a good is when the buyer takes  possession of the good or service

● Realization is complete when cash or cash equivalent is taken

○ Can’t record the sale until cash is received

● Revenue recognition – both earned and realized or realizable 

● Matching – recognize expenses in the same period that the related revenue is  reported (record it when the cost is incurred) 

● Credits and debits are used by non­profit, government companies,  ○ Both are used everywhere 

○ Debits on left, credits on right 

Clicker Questions 

1. Rent expense would appear in a company’s income statement 

2. The balance sheet reflects that ASSETS = LIABILITIES + STOCKHOLDER’S  EQUITY

3. EX­ Cash collected from customers is Operating Activity in the Statement of  Cash Flows

4. Auditors are independent parties that help to ensure management has  appropriately prepared the company’s financial statements.

a. Investors and creditors in their decisions by adding credibility to  the financial statements.

5. Periodicity indicates that the life of a company can be divided into artificial time  periods for periodic reporting

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