Chapter 2Accounting Cycle（I)AccountingEquationThe Account and Double-Entry AccountingAnalyzing the TransactionsJournalizingtheTransactionsPostingPreparing the Unadjusted Trial Balance
Chapter 2 Accounting Cycle (Ⅰ) Accounting Equation The Account and Double-Entry Accounting Analyzing the Transactions Journalizing the Transactions Posting Preparing the Unadjusted Trial Balance
Accounting equationsEconomicResourcesClaims to EconomicResourcesAssetsLiabilities + Owner'sEquityNetIncomeRevenues-expensesLiabilities +Owner'sAssets + expensesEquity +Revenues
Accounting equations Economic Resources Claims to Economic Resources Assets = Liabilities + Owner’s Equity Revenues- expenses = Net Income Assets + expenses = Liabilities + Owner’s Equity + Revenues
The Accounting EquationLiabilitiesAssetsOwnersEquityTahitiesmersEaut4ssets
AssetstheAssetsofarearesourceseconomicbusinessthat are expected to be of benefit inthe futureTheofmosttypesassetsarecommoncash,receivables,investments,officesuppliesmerchandise, furniture, land, and buildings
Assets Assets are the economic resources of a business that are expected to be of benefit in the future. The most common types of assets are cash,receivables, investments,office supplies, merchandise, furniture, land, and buildings
LiabilitiesLiabilitieswhichoutsiderclaimsarearepayabletoobligations-debtseconomicoutsidersThese outsider parties are called creditorsForpayable,example,notesaccountsliabilities(payable, accruedforexpensesincurred but not paid), long-term liabilities
Liabilities Liabilities are “outsider claims”, which are economic obligations-debts payable to outsiders. These outsider parties are called creditors. For example, notes payable, accounts payable, accrued liabilities( for expenses incurred but not paid), long-term liabilities
Owner's Equity“insider claims held by theOwner's equity areowners of the business, also called capitalOwner'smeasuredequitysubtracting1Sliabilities from assets
Owner’s Equity Owner’s equity are “insider claims” held by the owners of the business, also called capital. Owner’s equity is measured by subtracting liabilities from assets
RevenueRevenuethe1Sincreaseinowner's equitygoodscreatedbydeliveringor services tocustomers or clientsRevenuesalescomprisesservicerevenue,interest revenue, and etcrevenue
Revenue Revenue is the increase in owner’s equity created by delivering goods or services to customers or clients. Revenue comprises service revenue, sales revenue, interest revenue, and etc
ExpenseExpense is the cost of operating a businesseffect ofExpenseshave theoppositerevenues, so they decrease owner's equityTheincludeofcommontypesexpensessellingsalaryrentexpenses,expense,expenses,administrativeexpense, financingexpenses,and etc
Expense Expense is the cost of operating a business. Expenses have the opposite effect of revenues, so they decrease owner’s equity. The common types of expenses include selling expenses, salary expense, rent expense, financing expenses, administrative expenses, and etc
Net Income(or Loss)Net income is the difference betweenrevenues and expenses during a givenperiodRevenue-ExpenseNet Income(R> E)三Revenue- ExpenseNet Loss (R<E)三
Net Income( or Loss) Net income is the difference between revenues and expenses during a given period. Revenue – Expense = Net Income( R > E) Revenue - Expense = Net Loss ( R < E)
CaseoneYou start a business and place $10,000in a bank account. The $10,000 in thebank is considered to be an asset. Theequity (financial value) of the businessis equal to its assets
Case one You start a business and place $10,000 in a bank account. The $10,000 in the bank is considered to be an asset. The equity (financial value) of the business is equal to its assets