01addition.pptVIP

Question 2 (Chapter 1) No, this treatment is not proper. While the transactions does involve a receipt of cash, it does not represent revenues. Revenues are the gross increase in owner’s equity resulting from business activities entered into for the purpose of earning income. This transactions is simply an additional investment made by the owner in the business. C1 - * Assets Liabilities Owner’s Equity = + Provides the underlying framework for recording and summarizing economic events. Assets are claimed by either creditors or owners. Claims of creditors must be paid before ownership claims. The Basic Accounting Equation LO State the accounting equation, and define assets, liabilities, and owner’s equity. Assets Liabilities Owner’s Equity = + Provides the underlying framework for recording and summarizing economic events. The Basic Accounting Equation LO State the accounting equation, and define assets, liabilities, and owner’s equity. Resources a business owns. Provide future services or benefits. Cash, Supplies, Equipment, etc. Assets Assets Liabilities Owner’s Equity = + Provides the underlying framework for recording and summarizing economic events. The Basic Accounting Equation LO State the accounting equation, and define assets, liabilities, and owner’s equity. Claims against assets (debts and obligations). Creditors - party to whom money is owed. Accounts payable, Notes payable, etc. Liabilities Assets Liabilities Owner’s Equity = + Provides the underlying framework for recording and summarizing economic events. The Basic Accounting Equation LO State the accounting equation, and define assets, liabilities, and owner’s equity. Ownership claim on total assets. Referred to as residual equity. Capital, Drawings, etc. (Proprietorship or Partnership). Owner’s Equity Owners’ Equity Revenues result from business activities entered into for the purpose of earning income. Common sources of revenue are: sales, fees, services, commissions, interest, dividends, ro