MGMT 20000 Lecture Notes - Lecture 2: Accounting Equation, Accounts Receivable

• School: Purdue University
• Department: Management
• Course: MGMT 20000
• Professor: Frank Kane

Document Summary

Lo1: understand the business activities that financial accounting measures. Transactions must affect the financial position of the business to be recorded in a financial accounting system. Ex: the receipt of a sales order from a customer is not recorded until the product or service is provided to the customer. A business event that is not considered a recordable transaction is when the product has not been received yet. Ex: a customer places an order for a product but hasn"t received it yet. Signing a contract is not recorded in an accounting system. Until the product is provided in the contract, it"s not recorded. You record a payment when it is delivered, not when: Accounting systems and the storage of financial info. Assets: a resource that is going to benefit you in the future. Exs: cash, inventory, supplies, accounts receivable, buildings, and equipment. Accounting equation: assets must be equal liabilities and equity.