ACCT10001 Chapter Notes - Chapter 4: Accounting Software, Accounts Payable, Balance Sheet
22 May 2018
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recorded when there has been an exchange of resources
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Evidence must be provided
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Must be measurable in monetary terms
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Business transactions = exchanges of resources between entity and another entity/individual that
affects the assets, liabilities and owners' equity in an entity
Arm's length distance transaction = parties have equal bargaining positions
Entity concept = entity must keep records of business transactions separately from personal
transactions
Balance sheet (aka statement of financial position)
Drawings = personal expenditure of owner that involve business entity's funds
Sales invoices
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Purchase orders
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ATM receipts
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Source documents = original documents that verify a business transaction
Cash or credit transactions
Contribution of capital by owner
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Payment of wages
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Receipt of bank interest
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Payment of GST
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purchase of equipment
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payment of accounts payable
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sale of goods to customers
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provision of services to clients
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purchase of accounting software
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charging interest on overdue accounts receivable
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withdrawal of capital
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repayment of short
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term loan to financial institution
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cash purchases of office supplies
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payment for advertising.
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Examples:
Characteristics
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Personal transactions are unrelated to the operation of the business
negotiations
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Business events = occurrences that have potential to affect the entity
Business vs personal transactions and business events
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Document Summary
Busi(cid:374)ess t(cid:396)a(cid:374)sa(cid:272)tio(cid:374)s = e(cid:454)(cid:272)ha(cid:374)ges of (cid:396)esou(cid:396)(cid:272)es (cid:271)et(cid:449)ee(cid:374) e(cid:374)tit(cid:455) a(cid:374)d a(cid:374)othe(cid:396) e(cid:374)tit(cid:455)/i(cid:374)di(cid:448)idual that affe(cid:272)ts the assets, lia(cid:271)ilities a(cid:374)d o(cid:449)(cid:374)e(cid:396)s" e(cid:395)uit(cid:455) i(cid:374) a(cid:374) e(cid:374)tit(cid:455) (cid:396)e(cid:272)o(cid:396)ded (cid:449)he(cid:374) the(cid:396)e has (cid:271)ee(cid:374) a(cid:374) e(cid:454)(cid:272)ha(cid:374)ge of (cid:396)esou(cid:396)(cid:272)es. A(cid:396)(cid:373)"s le(cid:374)gth dista(cid:374)(cid:272)e t(cid:396)a(cid:374)sa(cid:272)tio(cid:374) = pa(cid:396)ties ha(cid:448)e e(cid:395)ual (cid:271)a(cid:396)gai(cid:374)i(cid:374)g positio(cid:374)s. E(cid:374)tit(cid:455) (cid:272)o(cid:374)(cid:272)ept = e(cid:374)tit(cid:455) (cid:373)ust keep (cid:396)e(cid:272)o(cid:396)ds of (cid:271)usi(cid:374)ess t(cid:396)a(cid:374)sa(cid:272)tio(cid:374)s sepa(cid:396)atel(cid:455) f(cid:396)o(cid:373) pe(cid:396)so(cid:374)al t(cid:396)a(cid:374)sa(cid:272)tio(cid:374)s. D(cid:396)a(cid:449)i(cid:374)gs = pe(cid:396)so(cid:374)al e(cid:454)pe(cid:374)ditu(cid:396)e of o(cid:449)(cid:374)e(cid:396) that i(cid:374)(cid:448)ol(cid:448)e (cid:271)usi(cid:374)ess e(cid:374)tit(cid:455)"s fu(cid:374)ds. Sou(cid:396)(cid:272)e do(cid:272)u(cid:373)e(cid:374)ts = o(cid:396)igi(cid:374)al do(cid:272)u(cid:373)e(cid:374)ts that (cid:448)e(cid:396)if(cid:455) a (cid:271)usi(cid:374)ess t(cid:396)a(cid:374)sa(cid:272)tio(cid:374) Pe(cid:396)so(cid:374)al t(cid:396)a(cid:374)sa(cid:272)tio(cid:374)s a(cid:396)e u(cid:374)(cid:396)elated to the ope(cid:396)atio(cid:374) of the (cid:271)usi(cid:374)ess. Busi(cid:374)ess e(cid:448)e(cid:374)ts = o(cid:272)(cid:272)u(cid:396)(cid:396)e(cid:374)(cid:272)es that ha(cid:448)e pote(cid:374)tial to affe(cid:272)t the e(cid:374)tit(cid:455) (cid:374)egotiatio(cid:374)s. Relatio(cid:374)ship (cid:271)et(cid:449)ee(cid:374) assets of the e(cid:374)tit(cid:455) a(cid:374)d ho(cid:449) the(cid:455) a(cid:396)e fi(cid:374)a(cid:374)(cid:272)ed. Dualit(cid:455) = e(cid:448)e(cid:396)(cid:455) (cid:271)usi(cid:374)ess t(cid:396)a(cid:374)sa(cid:272)tio(cid:374) (cid:449)ill ha(cid:448)e a dual effe(cid:272)t. Assets = lia(cid:271)ilities + ope(cid:374)i(cid:374)g e(cid:395)uit(cid:455) + i(cid:374)(cid:272)o(cid:373)e - e(cid:454)pe(cid:374)ses. Busi(cid:374)ess t(cid:396)a(cid:374)sa(cid:272)tio(cid:374)s (cid:272)a(cid:374) (cid:271)e a(cid:374)al(cid:455)sed (cid:449)ith the a(cid:272)(cid:272)ou(cid:374)ti(cid:374)g e(cid:395)uatio(cid:374) Wo(cid:396)k out effe(cid:272)t of t(cid:396)a(cid:374)sa(cid:272)tio(cid:374) o(cid:374) a(cid:272)(cid:272)ou(cid:374)ti(cid:374)g e(cid:395)uatio(cid:374)
