The accounting equation states: - Assets = Liabilities + Owners Equity
Owner's Equity has two components: - Owner's Equity = Contributed Capital + Retained Earnings
Contributed Capital - The amount of payments in cash or assets that the owners have made to the
company
The accounting equation ca...
Payroll Fundamentals 2 The accounting equation states: - ✔✔Assets = Liabi lities + Owners Equity Owner's Equity has two components: - ✔✔Owner's Equity = Contributed Capital + Retained Earnings Contributed Capital - ✔✔The amount of payments in cash or assets that the owners have made to the company The accounting equation can be expanded to: - ✔✔Assets = Liabilties + Contributed Capital + Retained Earnings The 5 different accounts of a typical for -profit organization - ✔✔- asset accounts - liability accounts - revenue accounts - expense accounts - owners' equity accounts Asset accounts - ✔✔Contains the value of items owned by the organization Liability accounts - ✔✔Indicates the money that the organization owes to its creditors Asset accounts include: - ✔✔- Cash - Accounts receivable - prepaid expenses - inventory Liabi lity accounts include - ✔✔- accounts payable - salaries and wages payable - vacation pay payable Revenue accounts - ✔✔Used to record the income earned by the organization during the accounting cycle Expense accounts - ✔✔Costs incurred by an organization in the process of earning revenue during a designated period of time Equity accounts - ✔✔Accounts that show the owners' or shareholders' worth or interest in the organization Owners' equity is divided into: - ✔✔Contributed capital & retained earnings General ledger accounts consists of the following five elements: - ✔✔- account name - opening balance - reference - debit and credit transactions - closing balance Each journal entry must contain the following components: - ✔✔- A journal entry reference or number - the date of the transaction - the debit and credit amounts to be applied to each account - a total of the debit entries and of the credit entries - a brief explanation of the transaction double -entry accounting - ✔✔Accounting system in which each transaction affects at least two accounts and has at least one debit and one credit Income Statement - ✔✔A financial statement which presents the revenue, expenses, and net profit or loss of an o rganization during a specific period of time
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller martinndungu1986. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $8.99. You're not tied to anything after your purchase.
