Expanded Accounting Equation n Assets = Liabilities + Owner’s Equity StockRetained Earnings +Revenues -Expenses -Dividends DrCr Dr Cr
Definitions n Assets n Liabilities n Equity n Revenue n Expenses n Gains n Losses
Accounting Cycle n Transaction n Journal – Debit – Credit n Ledger n Posting n Trial Balance n Adjusting Entries
Accounting Cycle continued n Financial Statements – Income Statement – Statement of Retained Earnings or n Statement of Owner’s Equity – Balance Sheet – Statement of Cash Flows
Accounting Cycle Continued n Closing entries – Transfer revenue account balances Income Summary – Transfer expense account balances to Income Summary – Transfer the balance of the Income Summary to the Capital account or Retained Earnings – Transfer the balance of the Withdrawals account or Dividends account to the Capital account or Retained Earnings n Post Closing Trial Balance n Reversing entries
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