Business of Accounting

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  • Topic: Balance sheet, Generally Accepted Accounting Principles, Income statement
  • Pages : 3 (537 words )
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  • Published : April 1, 2012
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American Intercontinental University
Unit 1 Individual Project
ACCT 311 – Managerial Accounting
March 25, 2012

Abstract
This paper describes a company who has just started in the month of March called Cats and Dogs Company started by D.C. Dawg. It gives a summary of the cash transactions that took place during the month of March. It also shows how each cast transactions affects the accounting equation and an additional piece of information that is related to the transaction other than the financial statements. In addition, it includes the four basic financial statements for the month of March.

The Business of Accounting
D.C. Dawg has just started a business in March called Cats and Dogs Company. These are the cash transactions that has occurred during this month: it contributed $6,000 for starting the business, borrowed $2,000 on first of March from the bank which is a 1-year, 12% note that has both principal and interest that will need to be paid by February 28, it has earned $900 in revenue, the expenses has amounted to $650, and the distributions to owners amounted to $25. Each of these cash transactions has an effect on the accounting equations and the formula for the accounting equation is Assets = Liabilities + Owner’s Equity. In addition, we consider that in a business transactions there “are four basic financial statements for most organizations” (AIU Online, para. 1, 2012) which are: the balance sheet, the income statement, the statement of owner’s equity, and the statement of cash flows.

First I will show how each cash transaction affects the accounting equation. Assets=Liabilities+Owner’s Equity

+ $6,000 cash+ $6,000 capital
+ $2,000 cash+ $2,000 notes payable
+ $900 cash+ $900 revenue
- $650 cash- $650 expenses
- $25 cash- $25 distribution

An additional piece of transaction information that could be recorded in an information system for a purpose other than the financial...
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