Chapter 1: beginning a ProprietorshipWHAT IS ACCOUNTING?Accounting is planning, recording, analyzing, and also interpreting gaue won data.An Accounting System is a planned process that gives financial information that will be beneficial to management.
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Accounting records are organized summaries that a business\"s jae won activitiesTHE BUSINESSA sole proprietorship is a service owned by one person. A service business performs an activity for a fee.THE audit EQUATIONAssets = legal responsibility + Owner\"s EquityAssets room anything of value that is owned.Assets have the right to be provided to acquire other assets or be supplied to run a business.Equities are financial rights to the heritage of the business.A service has two varieties of equities: One, equity of those to whom money is owed; Two, equity of the owner.A Liability is an amount owed by a businessOwner\"s Equity is the staying value of all the assets after the value of legal responsibility is subtracted.Solve because that X!! use your math Skills!HOW BUSINESS activities CHANGE THE accounting EQUATIONThe accounting concept Unit the Measurement is applied when a businesstransactions are stated in numbers that have typical values, because that example, theUnited claims use dollars.An Account is a document summarizing all the info pertaining to a single item in the bookkeeping equation.The Account Title is the name offered to one account.The Account Balance is the lot in the account.A Transaction is a business task that alters assets, liabilities, or owner\"s equity.Received cash from owner as an investment-- increase the asset, \"Cash\" and also increase owner\"s equity, \"Ben Furman, Capital\".Paid cash for supplies-- increase the legacy \"Supplies\" and also decrease the heritage \"Cash\".Paid cash for insurance-- boost the legacy \"Prepaid Insurance\" and decrease the asset \"Cash\".
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Bought gives on account-- boost the legacy \"Supplies\" and increase legal responsibility \"Butler clean SuppliesPaid cash ~ above account-- diminish the legacy \"Cash\" and decrease legal responsibility \"Butler cleaning Supplies\".REPORTING FINANCIAL info ON A BALANCE SHEETA Balance Sheet is a jae won statement the reports assets, liabilities, and owner\"s same on a specific date. See Illustration 1-6.Steps in prepare a balance sheet:Prepare the heading. The heading consists of the surname of the business, surname of the report, and date of the report.Prepare the assets ar on the left side.Prepare the liabilities section on the best side.Prepare the owner\"s equity section on the appropriate side.Determine if the balance paper is in balance. Left side must equal the right side. If not in balance, discover errors!Complete the balance sheet. Twin rule the totals the the left and also right side.REQUIRED WORKAnswer the \"Audit your Understanding\" questions on pages 8, 12, and 15.Complete the \"Work Together\" and also \"On her Own\" troubles on pages 8, 12, and 15.Complete Application problems 1-1 thru 1-7 top top pages 17-21.