Task Team of FUNDAMENTAL ACCOUNTING School of Business. Sun Yat-sen University Every accounting transaction has an equal affect on both sides of the equation Purchase a $20000 car for cash Increase asset car and decrease asset cash by $20,000. No net change to assets Purchase a $20.000 car on credit Increase asset car and increase liabilities by $20,000 Dual Aspect of Accounting Equation Assets= Liabilities Owners equity LHS = RHS Resources =obligations to creditors or claims on resources Residual claim Second view: Amounts invested in resources how these amounts were financed Resources=financed by creditors+ financed by owners An Illustration: Beauty photo Store Changes to the accounting equation of Beauty Photo Store(see the powerpoints Case for discussion Marks and Spencer In 1882. a Russian refugee named Michael Marks came to the north east of england Needing work, he put a tray round his neck and started selling haberdashery in the villages around Leeds. Two years later he borrowed f5 from his friend Isaac Dewhirst to buy stock, and was able to open a stall in Leeds market. Within ten years Marks's success as a trader had enabled him to establish a chain of stalls in markets throughout North East England In 1894, Marks realized that his business was getting too large for him to manage effectively on his own He decided to form a partnership with Tom Spencer-and Marks Spencer was born The business continued to thrive and grow, so in 1903 Marks and Spencer registered their partnership as a private limited company. This allowed more people to become involved with managing the growing company and increase its finances by buying shares in the company. One shareholder was Israel Sieff, who became chairman of the company in 1917. Sieff can be credited with shaping the future of Marks Spencer. By 1926, Marks Spencer had opened 125 stores. In order to continue its successful development the company finally registered as a public limited company(plc) in order to obtain as much capital as possible to finance its continued growthTask Team of FUNDAMENTAL ACCOUNTING School of Business, Sun Yat-sen University Every accounting transaction has an equal affect on both sides of the equation. Purchase a $20,000 car for cash. Increase asset car and decrease asset cash by $20,000. No net change to assets. Purchase a $20,000 car on credit. Increase asset car and increase liabilities by $20,000. Dual Aspect of Accounting Equation Assets = Liabilities + Owner’s equity. LHS = RHS. First view: Resources = Obligations to creditors or claims on resources + Residual claim. Second view: Amounts invested in resources = how these amounts were financed. Resources = financed by creditors + financed by owners. An Illustration: Beauty Photo Store Changes to the accounting equation of Beauty Photo Store (see the powerpoints) Case for Discussion Marks and Spencer In 1882, a Russian refugee named Michael Marks came to the North East of England. Needing work, he put a tray round his neck and started selling haberdashery in the villages around Leeds. Two years later he borrowed ￡5 from his friend Isaac Dewhirst to buy stock, and was able to open a stall in Leeds market. Within ten years Marks’s success as a trader had enabled him to establish a chain of stalls in markets throughout North East England. In 1894, Marks realized that his business was getting too large for him to manage effectively on his own. He decided to form a partnership with Tom Spencer – and Marks & Spencer was born. The business continued to thrive and grow, so in 1903 Marks and Spencer registered their partnership as a private limited company. This allowed more people to become involved with managing the growing company and increase its finances by buying shares in the company. One shareholder was Israel Sieff, who became chairman of the company in 1917. Sieff can be credited with shaping the future of Marks & Spencer. By 1926, Marks & Spencer had opened 125 stores. In order to continue its successful development the company finally registered as a public limited company (plc) in order to obtain as much capital as possible to finance its continued growth