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Principles of Financial Accounting
Chapter 3
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Accounting Equation Assets = Liabilities + SE Stockholder’s Equity is divided into:
Paid in capital Retained Earnings
Retained Earnings is dividend into: Net Earnings (revenues & expenses) Dividends
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Double entry accounting An account is an individual listing
of increases and decreases to specific assets, liabilities, etc.
Debits increase assets, expenses, and the dividends account.
Credits increase liabilities, revenues, and stockholders’ equity accounts.
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Accounting Cycle Journal – the book of original entry
A chronological record of transactions. Ledger – A collection of transactions to
specific accounts. Chart of accounts – a listing of all accounts
in the accounting system Trial Balance – a listing of all accounts
with a balance in the general ledger. Proves the equality of debits and credits.
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Assignment P3-8A page 139 BYP3-1 page 144 BYP3-9 page 147