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Econ 262, chp. 1 notes

by: Kaleigh Stalker Alves

Econ 262, chp. 1 notes Econ 262

Kaleigh Stalker Alves

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These are the notes from chapter one
Principles of Statistics II
Debra Stiver
Class Notes
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This 12 page Class Notes was uploaded by Kaleigh Stalker Alves on Sunday September 25, 2016. The Class Notes belongs to Econ 262 at University of Nevada Reno taught by Debra Stiver in Fall 2016. Since its upload, it has received 3 views. For similar materials see Principles of Statistics II in Statistics at University of Nevada Reno.


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Date Created: 09/25/16
Ch.  1  Class  notes  for  Fundamentals  of  Financial  Accounting,  5e   by  Phillips/Libby/Libby   UT  San  Antonio  edited  by  Linda  Vaello,  CPA       Chapter 1 Business Decisions and Financial Accounting Chapter  1  Learning  Objectives   LO  1-­‐  1  Describe  various  organizational  forms  and  business  decision  makers.     LO  1-­‐  2  Describe  the  purpose,  structure,  and  content  of  the  four  basic  financial  statements.    LO  1-­‐  3  Explain  how  financial  statements  are  used  by  decision  makers.     LO  1-­‐  4  Describe  factors  that  contribute  to  useful  financial  information.   LO  1-­‐ Organizational  Forms:   Three  main  types  of  business  organizations:   1. _____________________  –  a  business  organization  owned  by  one  person.  The  owner  is   personally  liable  for  all  debts  of  the  business.   2. _______________    –  a  business  organization  owned  by  two  or  more  people.  Each  partner  is   personally  liable  for  all  debts  of  the  business.   3. _________________  –  a  separate  entity  from  both  a  legal  and  accounting  perspective.   Owners  of  corporations  (stockholders)  are  not  personally  responsible  for  debts  of  the   corporation.  Note  a  corporation’s  stock  can  be  publicly  traded  (over  a  stock  exchange)  or   privately  traded.     Although  sole  proprietorships  make  up  the  majority  of  businesses  in  terms  of  quantity,  the   majority  of  business  wealth  is  held  in  corporations  due  to  the  limited  liability  a  corporation   provides.     The  Accounting  System  (Exhibit  1.1)   Accounting  is  an  information  system  designed  by  an  organization  to  capture  (analyze,  record,   and  summarize)  the  activities  affecting  its  financial  condition  and  performance  and  then  report   the  results  to  decision  makers,  both  inside  and  outside  the  organization     Operating,  Investing   and  Financing  Activities   Accounting     System   External  users   Accounting  Reports   (creditors,  investors,  etc.)   Internal  users   Financial   Managerial   (managers,  etc.)   Acc  2013  Chapter  1  Notes,  5e   Ch.  1  -­‐  p.  1     The  accounting  system  produces  two  kinds  of  reports.   1) Managerial  accounting  reports  (For  internal  use)  include  detailed  financial  plans  and   continually  updated  reports  about  the  operating  performance  of  the  company.  These   reports  are  made  available  only  to  the  company’s  employees  (internal  users)  so  that   they  can  make  business  decisions  related  to  production,  marketing,  human  resources,   and  finance.  For  example,  managerial  accounting  reports  are  needed  when  determining   whether  to  build,  buy,  or  rent  a  building;  whether  to  continue  or  discontinue  making   particular  products;  how  much  to  pay  employees;  and  how  much  to  borrow.   2) Financial  accounting  reports  (called  financial  statements)  are  prepared  periodically  to   provide  information  to  people  not  employed  by  the  business  (external  users).  These   external  financial  statement  users  are  not  given  access  to  the  detailed  internal  records   of  the  company,  so  they  rely  extensively  on  the  financial  statements.  The  four  main   groups  of  external  users  are  (1)  creditors,  (2)  investors,  (3)  directors,  and  (4)   government.     LO  1-­‐2  The  4  Basic  Financial  Statements     The  Basic  Accounting  Equation   One  of  the  central  concepts  to  understanding  financial  reports  is  that  what  a  company  owns   must  equal  what  a  company  owes  to  its  creditors  and  stockholders.  In  accounting,  there  are   special  names  for  the  items  a  company  owns  (  assets)  and  the  claims  on  these  items  by   creditors  (  liabilities)  and  stockholders  (  equity),  as  shown  below.     Resources  Owned  …                                        Resources  Owed  …   by  the  company   to  creditors   to  stockholders   Assets   =    Liabilities      +   Stockholders’  Equity   Abbreviated:                        =    L              +                                        SE     Separate  entity  assumption:  Requires  that  a  business’s  financial  reports  include  only  the   activities  of  the  business  and  not  those  of  its  stockholders.   Assets  are  _____________  controlled  by  the  company  that  have  measurable  value  and  are   expected  to  provide  future  benefits  to  the  company.  Some  examples  of  account  names  for   Assets  include     1.__________________________________________________   2.__________________________________________________   3.__________________________________________________   4.__________________________________________________   Accounting  2013  Class  Notes ,  5E   Ch.  1  -­‐  p.  2   Liabilities  are  ____________    ________    by  the  business  to  creditors.  .  Some  examples  of   account  names  for  Liabilities  include     1.  _______________________________   2._______________________________     Note  the  common  ending  ___________________.       Stockholders’  Equity  represents  owners’  claims  to  the  business  resources.  Stockholders’  equity   These  claims  arise  for  two  reasons.   1.  First,  the  owners  have  a  claim  on  amounts  they  contributed  directly  to  the  company  in   exchange  for  its  stock  (__________________      __________________________).   2.  Second,  the  owners  have  a  claim  on  amounts  the  company  has  earned  through  profitable   business  operations  (______________________      _____________________).   The  second  part  of  Stockholders’  Equity  (Retained  Earnings)  can  be  further  broken  down  into   net  income  (and  its  components)  and  Dividends   Revenues  –  Expenses  =  Net  Income     o ___________________  arise  from  sales  of  goods  or  services  to  customers.  They   are  measured  at  the  amount  the  business  charges  the  customer.   o ____________________  are  the  costs  of  business  necessary  to  earn  revenues.   They  include  wages  to  employees,  advertising,  insurance,  and  utilities.     Dividends  are  distributions  of  a  company’s  earnings  to  its  stockholders  as  a  return  on  their   investment.   Assets  =    Liabilities      +  Stockholders’  Equity        Revenues     Common  Stock   –  Expenses   NOTE:  Dividends  are  not  an  expense.   =  Net  Income     (profit  generated)     Retained  Earnings     Dividends   (profit  distributed)   The  Financial  Statements     The  term  financial  statements  refers  to  four  accounting  reports,  typically  prepared  in  the   following  order:   1. Income  Statement   2. Statement  of  Retained  Earnings   3. Balance  Sheet   4. Statement  of  Cash  Flows     Accounting  2013  Class  Notes ,  5E   Ch.  1  -­‐  p.  3   Income  Statement   The  purpose  of  the  income  statement  is  to  report  the  amount  of  revenues  less  expenses  for  a   period  of  time   Income  Statement:        Net  Income  =  _________________  -­‐  _________________     Account  Titles  on  the  Income  Statement   Students  refer  to  Exhibit  1.3  and  write  down  the  names  of  the  accounts  that  match  the  descript ions   below:   ____________________________   Revenue  earned  from  selling  apps  to  customers  in  September   ____________________________ Revenue  earned  from  providing  promotional  services  to  other  app   developers   ____________________________ Total  amount  earned  durin g  September   ____________________________ Cost  of  salaries  and  employee  wages  for  work  done  in  September   ____________________________ Cost  of  rent  for  the  month  of  September   ____________________________ Cost  of  utilities  used  in  September   ____________________________  Cost  of  insurance  coverage  for  September   ____________________________  Cost  of  advertising  done  in  September   ____________________________  Cost  of  taxes  on  September’s  income   ____________________________ Total  expenses  incurred  in  September  to  generat e  revenues   ____________________________ Difference  between  total  revenues  and  total  expenses   Note  expenses  are  for  charges  used,  expired,  performed  in  a  particular  period.   This  type  of  format  is  known  as  a   SINGLE  STEP  Income  statement   Statement  of  Retained  Earnings   The  statement  of  retained  earnings  reports  the  way  that  net  income  and  the  distribution  of   dividends  affected  the  financial  position  of  the  company  during  the  period.   For  SonicGateway,   most  changes  in  stockholders’  equity  relate  to  generating  and   distributing  earnings,  so  a  statement  of   retained  earnings  is  just  as  informative  as  a  detailed  statement  of  stockholders’  equity.     .     Students  refer  to  Exhibit  1.4  and  write  down  the  items  that  match  the  descriptions  below  for  the   statement  of  retained  earnings   _____________________________ Last  period’s  ending  Retained  Earn ings  balance   ____________________________ _Reported  on  the  income  statement  (  Exhibit  1.3  )   _____________________________ Distributions  to  stockholders  in  the  current  period   _____________________________ This  period’s  ending  Retained  Earnings  balance  (Reported  on  Balance   Sheet)   Accounting  2013  Class  Notes ,  5E   Ch.  1  -­‐  p.  4     The  formula  for  the  Statement  of  Retained  Earnings:         Beginning  Retained  Earnings  +  _____________  -­‐  ________________  =  Ending  Retained  Earnings   Which  retained  earnings  is  reported  on  the  Balance  Sheet?_______________________   Balance  Sheet   The  balance  sheet’s  purpose  is  to  report  the  amount  of  a  business’s  assets,  liabilities,  and   stockholders’  equity  at  a  specific  point  in  time.  Think  of  the  balance  sheet  as  a  picture  or  screen   capture  of  SonicGateway’s  resources  and  claims  to  resources  at  the  end  of  a  particular  day  (in   this  case,  September  30,  2015).     Assets  are  listed  in  order  of  liquidity,  that  is,  how  quickly  they  are  used  up  or  converted  into   cash.  Likewise,  liabilities  are  listed  in  order  of  how  soon  each  is  to  be  paid  or  settled.   The  balance  sheet  “balances”  because  the  resources  (assets)  equal  the  claims  to  the  resources   (liabilities  and  stockholders’  equity).       Formula  for  the  Balance  Sheet:         _____________________  =  ___________________  +  ____________________   Students  refer  to  Exhibit  1.5  and  write  down  the  items  that  match  the  descriptions  below  for  the   Balance  Sheet   _____________________________  Resources  controlled  by  the  company   _____________________________Amount  of  cash  on  hand  and   in  the  business’s  bank  account   _____________________________Amount  due  from  the  business ’s  customers  (Amounts  they  have  a   right  to  collect  from  their  credit  customers   ______________________ _______  Cost  of  paper  and  other  supplies  on  hand   _____________________________  Cost  of  computers,  desks,  etc.   _____________________________  Cost  of  software  and  programming  code  purchased  from  others   _____________________________  Total  amount  of  the  company’s  resources   _____________________________  Claims  on  the  company’s  resources   _____________________________  Creditors’  claims  on  the  company’s  resources   _____________________________  Amount  owed  to  suppliers  for  prior  credit  purchases  (  on  account)   (Generally  no  interest  is  charged)   ____________________________  Amount  of  loan  owed  to  the  bank  (  for  promissory  note)                        Interest  will  be  charged  on  the  amount  owed   ___________________________  Total  claims  on  the  resources  by  creditors   ___________________________  Stockholders’  claims  on  the  company’s  resources   ____________________________Amount  stockholders  contributed  for  company  common    stock   ____________________________  Total  earnings  retained  in  the  business  (  Exhibit  1.4  )   ____________________________  Total  claims  on  the  company’s  resources  by  stockholders   ____________________________  Total  claims  on  the  company’s  resources   Accounting  2013  Class  Notes ,  5E   Ch.  1  -­‐  p.  5     Statement  of  Cash  flows   The  fourth  financial  report  of  interest  to  external  users  is  the  statement  of  cash  flows.  It   includes  only  those  activities  that  result  in  cash  changing  hands.  The  statement  of  cash  flows  is   divided  into  three  types  of  activities.  Operating  activities  are  directly  related  to  running  the   business  to  earn  profit.  They  include  selling  apps  and  services,  paying  employee  wages,  buying   advertising,  renting  a  building,  obtaining  insurance  coverage,  and  so  on.  Investing  activities   involve  buying  and  selling  productive  resources  with  long  lives  (such  as  buildings,  land,   equipment,  and  software),  purchasing  investments,  and  lending  to  others.  Financing  activities   include  any  borrowing  from  banks,  repaying  bank  loans,  receiving  cash  from  stockholders  for   company  stock,  and  paying  dividends  to  stockholders.     The  statement  of  cash  flows  will  be  covered  more  indepth  at  the  end  of  the  semester  when  we   cover  Chapter  12.     Notes  to  the  Financial  Statements   Notes  help  financial  statement  users  understand  how  the  amounts  were  derived  and  what   other  information  may  affect  their  decisions.     Relationships  among  the  Financial  Statements   Here  is  how  the  four  statements  fit  together.  Review  Exhibit  1.7  in  your  book.   1) The  income  statement  reports  the  results  of  business  operations  for  the  accounting   period.  The  net  income  from  the  income  statement  is  a  component  in  determining   ending  Retained  Earnings  on  the  statement  of  retained  earnings.   2) The  ending  retained  earnings  balance  for  the  period  is  also  reported  on  the  balance   sheet.  If  we  did  not  report  the  ending  retained  earnings  balance  on  the  balance  sheet,   our  balance  sheet  would  not  balance.  So  the  statement  of  retained  earnings  must  be   prepared  before  the  balance  sheet  may  be  completed.       The  Cash  on  the  balance  sheet  is  equal  to  the  ending  Cash  reported  on  the  statement  of   cash  flows.     LO  1-­‐3  Using  Financial  Statements   Creditors  are  primarily  interested  in  answers  to  the  following  questions:  List  the  financial   statement  the  user  can  examine  to  answer  that  question   1. Is  the  company  generating  enough  cash  to  make  payments  on  its  loans?  What  financial   statement  can  they  examine  to  answer  that  question?____________________   2. Does  the  company  have  enough  assets  to  cover  its  liabilities?     Financial  statement?________________     Investors  are  primarily  interested  in  answers  to  the  following  questions:  List  the  financial   statement  the  user  can  examine  to  answer  that  question   1. What  is  the  immediate  return  (through  dividends)  on  my  contributions?   Financial  statement?________________     Accounting  2013  Class  Notes ,  5E   Ch.  1  -­‐  p.  6   2. What  is  the  long-­‐term  return  (through  stock  price  increases  resulting  from  the   company’s  profits)?  Financial  statement?________________   LO  1-­‐4  Factors  that  contribute  to  useful  financial  information.   External  Financial  Reporting   The  main  goal  is  to  provide  useful  financial  information  to  external  users  for  decision  making.   The  factors  that  affect  whether  information  is  useful  are:     Useful       Faithful   Relevant     Representation     For  financial  information  to  be  judged  useful,  it  must  be  relevant  and  a  faithful  representation.   Information  is  relevant  if  it  makes  a  difference  in  decision  making  and  it  is  a  faithful   representation  if  it  fully  depicts  the  economic  substance  of  business  activities.       The  usefulness  of  financial  information  is  enhanced  when  it  is  comparable  (to  prior  periods  and   other  companies),  verifiable,  timely,  and  understandable .       Comparable        Verifiable        Timely        Understandable     Accounting  Standards   The  system  of  financial  statement  reporting  in  use  today  has  a  long  history—all  the  way  back  to   a  publication  in  1494  by  an  Italian  monk  and  mathematician,  Luca  Pacioli.  Currently,  in  the   United  States,  the  Financial  Accounting  Standards  Board  (FASB)  has  the  primary  responsibility   for  setting  the  underlying  rules  of  accounting.  As  a  group,  these  rules  are  called  Generally   Accepted  Accounting  Principles,  or  GAAP  for  short  (pronounced  like  the  name  of  the  clothing   store).  The  accounting  rules  in  the  United  States  are  similar,  for  the  most  part,  to  those  used   elsewhere  in  the  world,  but  some  important  differences  exist.  The  FASB  is  working  alongside   the  International  Accounting  Standards  Board  (IASB)  to  eliminate  these  differences.  The   accounting  rules  developed  by  the  IASB  are  called  International  Financial  Reporting  Standards,   or  IFRS  for  short.   United  States   Where?   World   FASB     Name  of   IASB     (Financial  Accounting   organization?   (International  Accounting   Standards  Board)   Standards  Board)   GAAP     Abbreviation   IFRS   (Generally  Accepted   for   (International  Financial   Accounting  2013  Class  Notes ,  5E   Ch.  1  -­‐  p.  7   Accounting  Principles)   Reporting  Standards)   standards?     Ethical  Conduct   Ethics  refers  to  the  standards  of  conduct  for  judging  right  from  wrong,  honest  from  dishonest,   and  fair  from  unfair.  Intentional  financial  misreporting  is  both  unethical  and  illegal.  As  you  will   see  throughout  this  course,  some  accounting  and  business  issues  have  clear  answers  that  are   either  right  or  wrong.  However,  many  situations  require  accountants,  auditors,  and  managers   to  weigh  the  pros  and  cons  of  alternatives  before  making  final  decisions.  To  help  ensure  these   decisions  are  made  in  a  professional  and  ethical  manner,  the  American  Institute  of  Certified   Public  Accountants  (AICPA)  requires  all  its  members  to  adhere  to  a  Code  of  Professional   Conduct.     Not  all  ethical  dilemmas  are  clear-­‐cut.  Some  situations  will  require  you  to  weigh  one  moral   principle  (e.g.,  honesty)  against  another  (e.g.,  loyalty).       When  faced  with  an  ethical  dilemma,  follow  these  three  steps:   1. Identify  who  will  benefit  from  the  situation  and  how  others  will  be  harmed.   2. Identify  the  alternative  courses  of  action.   3. Choose  the  alternative  that  is  the  most  ethical.     Demonstration  of  a  few  Solved  Exercises .       You  will  get  more  practice  in  your  Connect  Assignments   M1-­‐12  Preparing  a  Statement  of  Retained  Earnings   Stone  Culture  Corporation  was  organized  on  January  1,  2014.  For  its  first  two  years  of   operations,  it  reported  the  following:     Net  income  for  2014     $    40,000     Net  Income  for  2015     45,000     On  the  basis  of  the  data  given,  prepare  a   statement  of  retained  earnings  for  2014  (its  first   Dividends  for  2014     15,000     year  of  operations)  and  2015.  Show   computations.   Dividends  for  2015     20,000       Total  assets  at  the  end  of  2014     125,000         Total  assets  at  the  end  of  2015     242,000     2014                     2015           Accounting  2013  Class  Notes ,  5E   Ch.  1  -­‐  p.  8             Alternate:  Let’s  go  one  step  further.  Let’s   Total  Liabilities  at  the  end  of  2014     50,000     assume  the  liabilities  are  as  follows:   Total  liabilities  at  the  end  of  2015     100,000     1. What  is  the  total  stockholders’  equity  at  the  end  of   2014?_______________________   2. Of  the  SE,  how  much  is  common  stock  at  the  end  of   2014?________________________   3. What  is  the  total  stockholders’  equity  at  the  end  of   2015?_______________________   4. Of  the  SE,  how  much  is  common  stock  at  the  end  of   2015?_______________________   E1-­‐3  Preparing  a  Balance  Sheet   DSW  is  a  designer  shoe  warehouse,  selling  some  of  the  most  luxurious  and  fashionable  shoes  at   prices  that  people  can  actually  afford.  Its  balance  sheet,  at  February  2,  2013,  contained  the   following  items  (listed  alphabetically  in  thousands  of  dollars).                       Required:   1. Prepare  the  balance  sheet  as  of  February  2,  2013,  solving  for  the  missing  amount.   Assets       Liabilities                                                             Stockholders  ‘  Equity                         Accounting  2013  Class  Notes ,  5E   Ch.  1  -­‐  p.  9                       As  of  Feb  2,  did  most  of  the  financing  for  assets  come  from  creditors  or   stockholders?________________     E1-­‐  5  Labeling  and  Classifying  Business  Transactions  The  following  items  relate  to  business   transactions  involving  K  ·∙  Swiss  Inc.     Required:     1.  Identify  an  appropriate  label  (  account  name)  for  each  item  as  it  would  be  reported  in  the   company’s  financial  statements.  Choose  from  the  following:  Accounts  Payable,  Accounts   Receivable,  Cash,  Common  Stock,  Dividends,  Land,  Notes  Payable,  Sales  Revenue,  Supplies,  and   Supplies  Expense.    2.  Classify  each  item  as  an  asset  (  A),  liability  (  L),  stockholders’  equity  (  SE),  revenue  (  R),  or   expense  (  E).                 Account  Name       Classification   a.  Coins  and  currency             ______________________   __________   b.  Amounts  K  ·∙  Swiss  owes  to  suppliers  of  watches     ______________________   __________   c.  Amounts  K  ·∙  Swiss  can  collect  from  customers     ______________________   __________   d.  Amounts  owed  to  bank  for  loan  to  buy  building     ______________________   __________   e.  Property  on  which  buildings  will  be  built       ______________________   __________   f.  Amounts  distributed  from  profits  to  stockholders     ______________________   __________   g.  Amounts  earned  by  K  ·∙  Swiss  by  selling  watches     ______________________   __________   h.  Unused  paper  in  K  ·∙  Swiss  head  office         ______________________   __________   i.  Cost  of  paper  used  up  during  month         ______________________   __________   j.  Amounts  contributed  by  stockholders  for  K  ·∙  Swiss  stock  ____________________   __________     E1-­‐6  Preparing  an  Income  Statement  and  Inferring  Missing  Values   Cinemark  Holdings  operates  movie  theaters  and  food  concession  counters  throughout  the   United  States.  Its  income  statement  for  the  quarter  ended  September  30,  2013,  reported  the   following  amounts  (in  thousands):               1.  Solve  for  the  missing  amounts  and  prepare  an  Income  Statement  for  the  quarter  ended   September  30,  2013.  TIP:  First  put  the  items  in  the  order  they  would  appear  on  the  Income   Statement  and  then  solve  for  the  missing  values.   2.  What  is  Cinemark’s  main  source  of  revenue  and  two  biggest   expenses?___________________Revenue_______________________________Expenses   Accounting  2013  Class  Notes ,  5E   Ch.  1  -­‐  p.  10     Exercise  1-­‐6  (Continued)                                                                                                                   E1-­‐8  Inferring  Values  Using  the  Income  Statement  and  Balance  Sheet  Equations   Review  the  chapter  explanations  of  the  income  statement  and  the  balance  sheet  equations.     Apply  these  equations  in  each  of  the  following  independent  cases  to  compute  the  two  missing   amounts  for  each  case.  Assume  that  it  is  the  end  of  the  first  full  year  of  operations  for  the   company.   TIP:  First  identify  the  numerical  relations  among  the  columns  using  the  balance  sheet  and   income  statement  equations.  Then  compute  the  missing  amounts.                 Accounting  2013  Class  Notes ,  5E   Ch.  1  -­‐  p.  11     S1-­‐6  (Req.  1)  Critical  Thinking:  Developing  a  Balance  Sheet   On  September  30,  Ashley  and  Jason  started  arguing  about  who  is  better  off.  Jason  said  he  was   better  off  because  he  owned  a  PlayStation  console  that  he  bought  last  year  for  $250.  He  figures   that,  if  needed,  he  could  sell  it  to  a  friend  for  $180.  Ashley  argued  that  she  was  better  off   because  she  had  $1,000  cash  in  her  bank  account  and  a  piece  of  art  that  she  bought  two  years   ago  for  $800  but  could  now  sell  for  $1,400.  Jason  countered  that  Ashley  still  owed  $250  on  her   car  loan  and  that  Jason’s  dad  promised  to  buy  him  a  Porsche  if  he  does  really  well  in  his   accounting  class.  Jason  said  he  had  $6,000  cash  in  his  bank  account  right  now  because  he  just   received  a  $4,800  student  loan.  Ashley  knows  that  Jason  also  owes  a  tuition  installment  of  $800   for  this  term.   Required:   1.  Prepare  a  financial  report  that  compares  what  Ashley  and  Jason  each  own  and  owe  on   September  30.  Make  a  list  of  any  decisions  you  had  to  make  when  preparing  your  report.   Assets   Ashley   Jason                           Total  Assets             Liabilities                               Total  Liabilities       Equity       Total  Liabilities  &  Equity         Test  your  knowledge  on  the  use  of  the  accounting  equation       1.    If  cash  is  $35,000,  accounts  payable  is  $15,000,  how  much  is  owner's  equity?_____________     2.    If  assets  decreased  $20,000  and  liabilities  increased  $5,000,  how  much  did  owner's  equity   change  (include  increase  or  decrease)  ______________________  ____________________     3.  During  May,  ABC  Company  reported  sales  of  $70,000,  accounts  receivable  of  $10,000,  cost  of   goods  sold  of  $15,000,  wages  expense  of  $10,000  and  wages  payable  of  $2,000.  What  is  net   income  for  May?_____________________________     Accounting  2013  Class  Notes ,  5E   Ch.  1  -­‐  p.  12  


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