Accounting 201 Rephrase in own words

1.Basic Accounting Equation: Assets=Liabilities+Stockholders’ Equity

Business transactions are economic events that require to record in the financial statement, and Assets, Liabilities, Stockholders’ equity items will change as a result of some economic events.

2.Give an example of a journal entry using at least two accounts.

Date	Account Titles and Explanation	Debit	Credit
2018 Oct. 7 Oct.10	Cash Service Revenue (Revenue cash for services performed) Rent Expense Cash (Paid cash for October office rent)	10,000 900	10,000 900

3.Assets: Cash. Debit should exceed credit. Show on the debit balance.

Liability: Note payable. Credits should exceed debits. Show on the credit balance.

Equity: Common stock. Increase stockholders’ equity. Show on the credit balance.

Revenue and expense：Decrease stockholders’ equity. Show on the debit balance.

4. First, determine what type of account is involved. Second, determine what items increased or decreased and by how much. Lastly, translate the increases and decreases into debits and credits.

5. The purpose of a trial balance is to prove that debits equal credits.

6.Operating activities are types of activities the company performs to generate profits. Relate to cash received or spent to directly support its guide services. For example: Oct. 26 Paid $4000 cash salaries.

Investing activities are activities include purchase or sale of long lived assets used in operating the business or investment securities. For example: Oct.2 purchased equipment for $5000 cash.

Financing activities are borrowing money, issuing shares of stock, and paying dividends. For example: Oct.1 issued not payable for $5000 cash.