COMM-1107EL Chapter Notes - Chapter 2: Trial Balance, The Ledger, Financial Statement

• School: Laurentian
• Department: Commerce and Administration
• Course: COMM-1107EL
• Professor: Kayla Levesque

Document Summary

A transaction is any event that has a financial impact on a business and that can be reliably measured. Every transaction has 2 sides and we always record both sides in the accounting records. When using the accounting equation template for recording transactions, retained earnings consists of expenses, revenues, and dividends declared. Therefore, the type of se transaction must be noted beside the change. Retained earnings = opening balance + net income dividends declared. Both sides on the accounting equation must balance! The double-entry system of accounting is the method that all but the smallest of businesses use. Every transaction has 2-sides and affects 2 (or more) accounts. The chart of accounts lists the name of every account and its unique account number, but does not provide the account balances. It is used to keep track of all its accounts. There are typically gaps between account numbers to leave room to insert new accounts.