Week 1 Notes, Principles of Accounting
Week 1 Notes, Principles of Accounting ACC 215
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This 2 page Class Notes was uploaded by Kayla Notetaker on Friday September 4, 2015. The Class Notes belongs to ACC 215 at Marshall University taught by Dr. Jean Price in Fall 2015. Since its upload, it has received 23 views. For similar materials see Principles of Accounting in Accounting at Marshall University.
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Date Created: 09/04/15
Accounting 215 Financial Statements and Transactions Accounting equation A L SE or Assets Liabilities Stockholder s Equity 0 Assets things we w Ex Supplies Equipment 0 Liabilities what we MEX Expenses Notes Payable 0 Stockholder s Equity arises from two sources 0 By selling shares of stock aka contributed capital cc 0 By retained earnings RE from being profitable Income Statement records how profitable a business is in a period of time 0 Revenues amounts earned 0 Expenses cost of earningcost of doing business gt An income statement will look similar to this XYZ Corporation Income Statement For the month of August 2014 Revenue increase in assets that result from sales Expenses cost of resources required to earn revenue Net Income RevenueExpenses Statement of Changes in Retained Earnings 0 Keeps track of what make retained earnings change 0 Goes up with higher net income 0 Goes down with dividends dividends are funds to shareholders gt An example of a Statement of Changes in Retained Earnings XYZ Corporation Statement of Changes in Retained Earnings For the month of August 2014 Beginning Retained Earnings Carries over from previous month 0 if new business Net Income Dividends Ending Retained Earnings Balance Sheets represent both sides of the accounting equation and MUST balance gt Here is a sample Balance Sheet Cash Always the first Asset listed Accounts Payable What you owe other businesses Accounts Receivable What a customer owes you Notes Payable Cash borrowed to be repaid at a future date Supplies Total Liabilities Equipment Common Stock Stock sold to shareholders Retained Earnings Total Stockholder s Equity Total Assets Total L SE A L SE llll Accounting 215 Account a record of increases and decreases in each element of the financial statements 0 EX Cash Notes Payable etc Accounts can be shown in several ways but are commonly observed using Taccounts a twocolumn record that consists of an account and is split in two sides resembling a letter T An example of a Taccount Account Title Debit Credit Left Side Right Side The left side of a Taccount is always debit and the right side is always credit Debits and credit do NOT represent increases or decreases in amounts Rather they just represent where entries are made into the account Each account had a normal balance which means an account that usually have a debit balance have a normal balance on the debit side and an account that usually has a balance on the credit side has a normal credit balance Increases and decrease to an account are based on normal balances A IL f quotH I Di Debit Credit Debit Credit Credit Normal Normal Normal Balance Balance Balance
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