AC 210 Notes 8/30/16
AC 210 Notes 8/30/16 AC 210
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This 2 page Class Notes was uploaded by Carter Cox on Tuesday August 30, 2016. The Class Notes belongs to AC 210 at University of Alabama - Tuscaloosa taught by Lisa McKinney in Fall 2016. Since its upload, it has received 88 views.
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Date Created: 08/30/16
AC-210 8/30/16 Chapter 2 – The Balance Sheet Building a Balance Sheet - Asset = Liabilities + Stockholders Equity o L- Debt Financing Measurable amounts that the company owes to creditors o E- Equity Financing Owners claims to the business resources Financing and investing Activities - Exchange being taken place o What being documented - Company always receives something and gives something o Name what’s exchanged - Dollar amount associated with exchange o Analyze the financial effects Transactions and other Activities - External Exchanges o Transactions between us and outside parties o Involves liabilities and equity that you can see between a company and another person - Internal Event o Event occur within a company Using assets to create an inventory product Study the Accounting Methods - Analyze - Record - Summarize - Duality of effects o Every transaction has at least two effects on the basic accounting equation o 1 of 3 options - A=L+SE o Assets must equal liabilities plus stockholders equity for every accounting transaction - Transaction o Business activity that affects the basic accounting equation o Step 1: Analyze the Transaction - Name is given to each item exchanged this is referred to as account titles - Tailor to each companies business - An exchange of only promises is not a transaction o Therefore no impact on the accounting equation Step 2 and 3: Record and Summarize - One way to record would be to put everything into a spread sheet - Most companies use computerized accounting system o This can handle large number of transactions Debit/ Credit Framework - Keep balances correct - Whether or not it is decreasing or increasing - Assets o Normal balance (Cash equipment, software Debit balance = increase cash o Increase with Debit decrease credit - Liabilities o Normal Balance Credit - Stockholders Equity o Normal Balance Credit
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