3. The accounting equation does not have to be in balance to be correct. 4. A business that performs an activity for a fee is a service business. 5. The amount in an account is an account balance. 6. The capital account is a liability account. 7. Double lines below a column total mean that the totals have been verified as correct. 8. A withdrawal is an expense. 9. Cash is increased by expenses. ____ 10. Payments for advertising‚ equipment repairs‚ utilities‚ and rent are expense transactions.
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approaches share many aspects in common‚ there are two key differences that distinguish each method from the other. Essentially‚ the difference between cash accounting and accrual accounting boils down to the way debits and credits are applied in the bookkeeping process. To understand the difference‚ it is first necessary to define each type of accounting process. Cash accounting‚ which is also known as cash basis accounting‚ allows for the recognition of income at the time it is actually
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School of Mechanical‚ Materials and Manufacturing Engineering MM2MN1 – Management Studies “1” Balancing the Books Objectives and Learning Outcomes • • • • • • • Double entry accounting The balance sheet The balance sheet equation The trial balance The trading‚ profit and loss account Opening and closing stock The ledger Prof John Dominy February 2013 MANAGEMENT STUDIES “1” BALANCING THE BOOKS Introduction Now that we have planned our business and established that it is viable
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How to Adjust Entries for a Trial Balance A trial balance is created by companies at the end of an accounting period. It contains a list of all accounts within an accounting system that have balances. Companies separate the accounts into different categories‚ which include assets‚ liabilities‚ equities‚ revenues and expenses. The accounts are listed in order‚ beginning with assets‚ and each includes a balance that is either a debit or credit. Asset and expense accounts have debit balances‚ while
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material visit www.PlentyofeBooks.net Uploaded By Bhavesh Pamecha (samsexy98) 1 Lesson 1: Basics of Accounting Lesson Objectives On completion of this lesson‚ you will be able to understand Principles and concepts of Accounting Double Entry System of Accounting Financial Statements 1.1 Introduction Accounting is a process of identifying‚ recording‚ summarising and reporting economic information to decision makers in the form of financial statements. Financial statements will be useful
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sheet is a convenient means of remembering the rule that an increase in an asset is recorded on the left side and the asset account normally has a debit balance b. Credit: increases in liability and owners equity accounts are recorded by credit entries and decreases in these accounts are recorded by debits. The liabilities and owner’s equity belong on the right side of the balance sheet‚ whether there be a increase it will still reside on right hand side‚ and liabilities and owner’s equity accounts
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journalizes the accountant applies the rules of double-entry accounting. Remember that double-entry accounting means that each transaction must be recorded in at least two accounts or that the debits must equal the credits. After applying the rules of debits and credits‚ the accountant should then record the transactions in a journal‚ or journalize. A journal is a complete record of each transaction. It’s easy to remember‚ because journal entry has the word journal in it! The third step in the
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Syllabus Business Studies: Recommended Book: Business Studies by Karen Borrington Peter Stimpson Session: 2011 to 2012 Class: 8A 1st Term April-June‚ 2011 | April-2012 | Unit 1 | The purpose of business activity | | Unit 2 | Types of business activity | May-2012 | Unit 3 | Forms of business organization | September-2012 | Unit 4 | Government and economic influence on business | October/November‚ 2012 | 1st Term Exams | | November-2012 | Ch.5 | Other external influences on business
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Equation The accounting equation is the basis of double entry accounting. The equation places debits and credits on each side of the equation with a balance on each side being required. The debits are accounted for as assets‚ while the credits fall under liabilities and shareholder equity. (Kimmel‚ Weygandt‚ and Kieso‚ 2011) The equation looks like: Assets = Liabilities + Shareholder Equity. A system of journal entries that show a debit and credit for each entry is used to enter the information. At the
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Chapter 02 - Investing and Financing Decisions and the Accounting System HANDOUT 2 – 1 SOLUTION‚ continued ANALYZING TRANSACTIONS Analyze each of the following transactions of World Wide Webster by performing each of the following. Then‚ use the chart on the following page to keep track of the amount in each account: (a) Stockholder invests $10‚000 into the business in exchange for 10‚000 shares of $1 par value common stock. 1. Decide if a transaction took place. Yes – received cash and gave stock
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