More on the Basic Accounting Equation (3 pages)

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More on the Basic Accounting Equation



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More on the Basic Accounting Equation

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Lecture number:
3
Pages:
3
Type:
Lecture Note
School:
University of Arizona
Course:
Acct 200 - Introduction to Financial Accounting
Edition:
1

Unformatted text preview:

ACCT 200 1st Edition Lecture 3 Outline of Last Lecture I Important Review II Important Equations III GAAP Generally Accepted Accounting Principles IV Miscellaneous Outline of Current Lecture I Review of Key Points to Remember II Transactions Journal III Solutions to Brief Exercise 2 10 IV Solutions to E 2 3 V Intro to Debits and Credits VI Basic Accounting Equation Expanded with Debits and Credits Current Lecture Anything the company prepays is an asset When revenue increases equity net income and retained earnings all increase as well When expenses increase equity net income and retained earnings all decrease When dividends increase retained earnings and equity both decrease dividends not on income statement When you buy on account you use accounts payable When you sell on account you use accounts receivable Transactions Journal Transaction Assets 1 sell stock cash 25 000 2 borrow money cash 10 000 3 buy equipment cash 24 000 Liabilities Equity common stock 25 000 note payable 10 000 Equipment 24 000 4 pay advance rent cash 6000 Prepaid rent 6000 5 buy supplies on account supplies 2300 6 service cash 3600 acct payable 2300 retained earnings 3600 7 service on account acct receivable 2500 retained earnings 2500 8 cash in advance cash 600 9 wages cash 2800 retained earnings 2800 10 pay dividends cash 200 dividends 200 unearned revenue 600 Solutions to Brief Exercise 2 10 a Services to customers for 25 000 cash assets 25 000 cash equity 25 000 service revenue b Buy supplies on account for 15 000 assets 15 000 supplies liabilities 15 000 accts payable c Pay 6000 salaries assets 6000 cash equity 6000 expenses Solutions to E 2 3 Transaction Assets 1 issue stock 32 000 cash 2 buy land w notes payable 19 000 land 3 buy equipment Liabilities Equity 32 000 common stock 19 000 note payable 8000 equipment 8000 cash 4 hire employees business transaction no attached yet not listed in this journal 5 receive cash for rental fees earned 12 000 cash 6 buy supplies on acct 2000



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