ACTG 1P91 Chapter Notes - Chapter 2: Issued Shares, Retained Earnings

• School: Brock University
• Department: Accounting
• Course: ACTG 1P91
• Professor: Sohyung Kim

Document Summary

Ch. 2 balance sheet: assumptions behind financial statements. Accountants assume that the unit of measure has a stable value over time. Businesses are assumed to continue to operate into foreseeable future: balance sheet revisit. Accounting equation: assets = liabilities + shareholders equity: definitions. Assets: an economic resource that provides future benefits. Current assets: benefits come within a year (ex. Accounts receivable, an asset created by selling products or services on credit. Long- term assets: benefits extend beyond a year. Liabilities: an economic obligation that requires future sacrifice. Current liabilities: obligation due within a year (ex. Accounts payable, a liability created by buying products or services on credit) Long-term liabilities: obligation due beyond a year from now (ex. Payable, a liability expressed by a written promise to make a future payment at a specific time) Shareholders equity: assets that remain after subtracting liabilities, also called net assets. Contributed capital: amount of cash received for shares issued.