ACCTG414 Lecture Notes - Employee Benefits, Christine Hewitt, Cdj
8 Apr 2014
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Review of the accounting cycle - supplementary notes. The accounting cycle begins with the identification of a transaction that must be recorded. A transaction involves an exchange of money, goods, or services between the firm and an external party. Examples include the sale of goods, the purchase of supplies, and the payment of salary to employees. Transactions are recorded using the double-entry method of book-keeping that is based on the following equation: The left side of this equation comprises everything owned by the business (its assets). The right hand side of the equation tells us how the assets were financed. Liabilities are the result of financing with debt and owners" equity represents the share of assets that have been financed by the owners. The best way to learn the steps in the accounting cycle is to work through an example using a case. Below you will find the larry owens real estate limited case.
