Assets, Liabilities, and Owner's Equity

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Assets, Liabilities, and Owner's Equity


Lecture number:
1
Pages:
2
Type:
Lecture Note
School:
Miami University, Oxford
Course:
Acc 221 - Intro to Financial Accounting
Edition:
1
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Unformatted text preview:

Lecture 1 Outline of Current Lecture  Chapter 1:  Assets, Liabilities, and owner’s equity  Accounting Formula, Additional Facts o Assets = Liability + Owner’s Equity o Additional Facts About Accounting Cycle Current Lecture  Chapter 1: Assets, Liabilities, & Owner’s equity  Assets, Liabilities, and Owner’s Equity o 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 Facts o 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?  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 ACC 221 1st Edition



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