After each transaction, the equality of the accounting equation can be determined by adding up the balances of all the asset accounts and comparing the total to the sum of all the liability and owners' equity accounts.
- There are three primary financial statements, … the balance sheet, the income statement, … and the statement of cash flows. … The elements of the balance sheet: … assets, liabilities, owner's equity. … The elements of the income statement: … revenues and expenses. … Each of these elements is comprised … of many different accounts. … Now, an account is a specific accounting record … that provides an efficient way … to categorize similar transactions. … Thus, we may designate asset accounts, … liability accounts, and owner's equity accounts. … Examples of asset accounts are cash, … inventory, and equipment. … Liability accounts include accounts payable … and notes payable, for example. … The equity accounts for a corporation … are capital stock, or paid in capital, … and retained earnings. … Now, you can think of an individual account … as a summary of every transaction … affecting a certain item, like cash. … The summary may be recorded on one page in a book … or in one column of a spreadsheet, …
- Reviewing financial statements
- Analyzing transactions
- Categorizing transactions
- Obtaining financing and buying equipment
- How revenue and expenses fit in the accounting equation
- Recording the sale of goods or services
- Posting journal entries to accounts
- The accounting cycle: step by step
Skill Level Beginner
1. Review of the Financial Statements
2. Fours Steps in the Bookkeeping Process
3. How Transactions Affect the Accounting Equation
4. The General Ledger
5. Illustration of the First Three Steps in the Accounting Cycle
The role of computers3m 44s
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