Basic Transactions in Accounting System

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Basic Transactions in Accounting System

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Miami University, Oxford
Acc 221 - Intro to Financial Accounting
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Lecture 4 Outline of Previous Lecture  Chapters 1 & 2: Additional Facts About Accounting System  Accounting System o Traditional accounting system routine o Asset, Liability, Owner’s Equity Accounts  Additional Facts o Entries don’t have to affect different sides to stay in balance o No set accounting periods Outline of Current Lecture  Chapter 3  Accounting System o Shareholders o Accounting Periods  Differences in Assets o Inventory v. Equipment  Basic Transactions Current Lecture  Chapter3  Accounting System o Shareholders  Claims to Assets (Gaining money) is done through selling shares of stock  General Ledger  Trial Balance  Balance Sheet o Accounting Periods  Must know accounting period, so you know when to complete financial statement  New accounting period: transfer ending balances to beginning balances for new period  Differences in assets o Inventory V. Equipment  Inventory – what you are selling to customers  Equipment – what companies use within the business  Basic transactions o Sale of inventory to a customer (2 parts):  Sale: selling product to customer in exchange for cash o Debit asset cash (Adding money from sale to your cash) ACC 221 1st Edition

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