g Weekg1:gIntroductiongtogrecordinggaccountingginformationg
Weekg1.1
ss Whatgisgangaccountg
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Everygsinglegthinggingagbusinessgwillghavegonegaccountgandghavegangaccountgnumber
Examplesgsuchgasgland,gcar,rentg
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Thegpurposegofgangaccountgisgtogkeepgtrackgofganyggimpactgofgthegbusinessgtransactiongofgthatg
gparticulargitemg
AngaccountgcontaingagTgaccount,gthegleftgsidegandgthegrightgsideg
s s Ingthegaccountinggsystemgeverygsinglegitemgingthegaccountgwillgcontaingangaccountgnumberg
s s Everygsinglegitemgshouldghavegonegaccountgandgonegaccountgnumberg
Whatgaregthegfourgfinancialgstatements?
Financialgstatementgisgusuallygpreparedgingthegendgofgthegyeargingagbiggdocumentgwhichgisgcall
ss
edgAnnualgreportg
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Angannualgreportgwillgincludeg
-
Incomegstatementg(whichgisgalsogcalledgasgFinancialgPositiongorgalsogcalledgProfitgandgLoss
gStatementgorgcalledgasgComprehensivegincome)g
-
Balancegsheetgstatementg(whichgisgalsogcalledgthe:EquitygstatementgorgalsogcalledgthegState
ssmentgofgfinancialgposition)g
-ChangesgingEquity
-Cashgflowgstatementg
Incomegstatement:ggreportsgthegrevenuesgandgthegexpensesgandgthereforegthegprofitgandgt
heglossgofgthegbusinessg
ss
Ifgthegrevenuegisghighergthangthegexpensesgitgisgagprofitg
s sButgifgthegrevenuegorgthegtotalgrevenuegisglessgthangthegtotalgofgexpensesgthangweghavegaglossg
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Revenue-Expenses=ProfitgorgLoss
Thegpurposegofgangincomegstatementgisgtogmeasuregthegfinancialgperformancegofgagfirmgorgagb
usinessgingtermsgofgsellinggthegproductsgorgservicesgtogthegclientsgandgalsogcontrollinggthegexpe
ss
nsesgwithingthegbusinessgoperation.g
ss
Balancegsheetgstatement:
ss Thegbalancegsheetgstatementgreportsgthegassetsgthegliabilitiesgandgthegequity
ss Assets=Liabilitiesg+gEquitygg
ItgisgcalledgthegBasicgaccountinggequationg
ChangesgingEquitygstatement:
gThisgstatementgreportgthegchangesgingequityg
WhichgincludegthegRetainedgearningsgandgDividend
Cashflowgstatement:
Itgwillgreportgthegchangesgingcashgactivitiesgfromg
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Operatinggsection,InvestinggandgFinancingg
s s
Whatgisgthegbasicgaccountinggequation?
Assets=Liabilitiesg+gEquitygg
Whatgisgagcurrentgasset
gAregcashgandgothergassetsgthatgaregreasonablygexpectedgtogbegrealizedgingcashgwithingonegye
argorgduringgthegnormalgoperatinggcycle,gwhichevergisglonger.g(Itgisgagshortgtermgasset)g
Ex.gShortgtermginvestment,ginventory,g
Cashgandgcashgequivalents
s s
Accountsgreceivable
ss
s Prepaidgexpenses
s
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Marketablegsecurities
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ssMarketplace
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Whatgisgagnongcurrentgassetg
gAregassetsgandgcashgthatgaregnotgexpectedgtogbegconvertedgintogcashgwithingonegyeargfromgth
egdategofgthegbalancegsheet.
gEx.gplant,gpropertygLand,gandgequipmentg(PP&E)
Trademarks
Long-termginvestmentsgandggoodwill—whengagcompanygacquiresganothergcompany
Assetsgincludeg Liabilitiesgincludeg
Equipment Accountgpayablegagbusg
Expense
s s
Accountgreceivableg
Prepaidgexpenseg
s s
Equipmentg
s s
Landg
Buildingg
s s
Houses
s s
Assetginclude
Equipment
ss
Accountgreceivableggisgwhengtheyghavegreceivedgtheggoodgandgservicesgbutghaven’tgpaidgforgi
tgyetg(Representgmoneygowedgtogyourgbusinessgbygcustomers)
ss
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Houses
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Prepaidgexpensegpayinggthegfuturegexpensegingadvanceg
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Accountgpayablegitgisgwhengagcompanygpaysgforgaggoodgandgservicesgusinggcreditg(Itgreprese
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ntgthegmoneygthatgyourgbusinessgowesgtogsuppliers)
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Unearnedgrevenuegitgisgwhengthegcustomergpaysgforgtheggoodgandgservicesgbutghaven’tgreceiv
edgtheggoodsgandgservicesgyetg
ss
Notegpayablegitgisgaglonggtermgliabilityg
Weekg1.2
ss DebitsgandgCredits