第二章会计科与账户.pptVIP

C2 Account titles and Accounts S1 Accounting Equation and Economic Activities 1. Accounting Equation Asset =Liability + Equity Effects of Economic Events on the Elements A economic event is an occurrence or a happening that has an economic consequence to an entity, involving one or more of the elements of financial statements. Economic events may be external or internal to the entity. Effects of Economic Events on Financial statement S2 Effects of Transactions on the Accounting Equation Each economic event affecting a business has a dual effect on the accounting equation. The five transactions that follow illustrate how this dual effect maintains the balance of the accounting equation 1.An attorney invested $10,000 cash in a legal practice. Assets = Liabilities + Owner’s equity +$10,000 + $10,000 2. The legal practice purchased supplies on account at a cost of $800. Assets = Liabilities + Owner’s equity +$800 +$ 800 3. Legal services are performed for clients on account $1000. Assets = Liabilities + Owner’s equity +$1000 +$ 1000 4.Supplies costing $300 are used. Assets = Liabilities + Owner’s equity -$300 -$ 300 5. The legal practice pays $600 due on an account with a supplier Assets = Liabilities + Owner’s equity -$600 -$ 600 Note: Other examples are showed in the book. S4 Account title A company may have many assets and liabilities, and many revenues, expenses, gains, and losses. The effects of transactions that cause changes in the various financial statement elements are summarized in accounts. Accounts are used to accumulate the dollar effects of transactions and other economic events on each financial statement item. In “T-account” form, an account appears this way: Account title No. Debit side Credit side (left) (right) The vertical portion of the T divides the account into two sides, the left side or debit side,