CMR Assignment 6
1nj0h4783i9
FINANCIALSTATEMENTPREPARATION-1.pptxFinancial Statement Preparation
Business Transactions must be recorded
Generally Accepted Accounting Principles (GAAP) are employed to record transactions
GAAP requires that business transactions be recorded using the following classifications:
ASSETS Property owned by the business
LIABILITIES Debts of the business
EQUITY Stock, Retained Earnings, Treasury Stock
REVENUE Sales of Services or Products
EXPENSES Costs of Doing Business
Sample Transactions
SOLD SERVICES FOR CASH $ 5,000
CASH INCREASES =ASSET
SERVICES INCREASES = REVENUE
PAID RENT $ 2,000
RENT EXPENSES INCREASES = EXPENSES
CASH DECREASES = ASSET
PURCHASED INVENTORY ON ACCOUNT
INVENTORY INCREASES = ASSET
ACCOUNTS PAYABLE INCREASES = LIABILITY
JOURNALIZED AND POSTED TRANSACTIONS
TRIAL BALANCE
Financial Statements
