BUSS1030 Lecture Notes - Lecture 2: Creative Accounting, Accounting Equation, Trial Balance

• School: University of Sydney
• Department: Business Studies
• Course: BUSS1030
• Professor: Abdul Razeed

Document Summary

Enron creative accounting: build an asset like a power plant and immediately claim profit. Or: oe = a l: a assets, l liabilities, oe owner"s equity (claims to economic resources, the equation must always balance. Assets - something a company owns that gives you future economic benefit eg. land, building (a resource controlled by the entity as a result of past events, and from which economic benefits are expected to flow to the entity) Intangible no physical form eg. good will (when you buy a company you also buy their customers / brand name), trademark eg. lets do it by nike: tangible has a physical form eg. land. Inventories whatever you buy/make to sell: supplies what you buy/make to use, goodwill. Statement of financial position also has claims against assets liabilities (external) and owners" equity/capital (internal claims) Examples: accounts payable, accrued liabilities a concept, not an account.