ACC 221 1st Edition Lecture 1 Outline of Current Lecture - Chapter 1: Assets, Liabilities, and owner’s equity Accounting Formula, Additional Factso Assets = Liability + Owner’s Equityo Additional Facts About Accounting CycleCurrent Lecture- Chapter 1: Assets, Liabilities, & Owner’s equity Assets, Liabilities, and Owner’s Equityo Assets - Something that is owned and will provide future benefit. Total of the “stuff”. Increase/ Decrease Rules:- Amount placed on left side of account (Dr.) balance increases- Amount placed on right side of account (Cr.) balance decreases Normal balance = Debit balance (Beginning balance = 0 in Dr. side)o Liabilities – Claims of the non-owners to the “stuff”. Increase/ Decrease Rules:- Amount placed on left side of account (Dr.) balance decreases- Amount placed on Right side of account (Cr.) balance increases Normal Balance = Credit Balance (Beginning balance = 0 in Cr. Side)o Owner’s Equity – Claims of the owners to the “stuff”. Increase/ Decrease Rules:- Amount placed on left side of account (Dr.) balance decreases- Amount placed on Right side of account (Cr.) balance increases Normal Balance = Credit Balance (Beginning balance = 0 in Cr. Side) Accounting Formula, Additional Factso Assets = Liabilities + Owner’s Equity Creates the balance sheet of the organization What we want to know, start business with your sister:- How much of the money is in account at any given time?- How much of the money is mine?- How much of the money is my sister’s?These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute. Non-owners (Liabilities) cannot remove money from the account—only owners o Additional facts about accounting cycle:- Total assets must ALWAYS equal total liabilities + owner’s equity- Liability accounts – keep track of non-owner’s claim to assets- Equity accounts – keep track of owner’s claim to assets- Debit side for all accounts is on the left, credit side for all accounts is on the right- Only positive numbers are used in the accounting system- The general ledger lists all individual transactions; the trial balance equals onlythe ending balances for each account. - Accounts are shaped like a ‘T’, referred to as
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