Accounting

Semester 2, 2023/2024

Chapter 1

Li Wen
 Chapter 1

Accounting in Business
Accounting in Business
 Learning objectives

CONCEPTUAL
C1 Explain the importance of accounting and identify its users.
C2 Describe the importance of ethics and GAAP.

ANALYTICAL
A1 Define and interpret the accounting equation and each of its
components.
A2 Compute and interpret return on assets.

PROCEDURAL
P1 Analyze business transactions using the accounting equation.
P2 Identify and prepare basic financial statements and
explain how they interrelate.
 Learning Objective C1

Explain the importance of accounting

and identify its users.

© McGraw-Hill Education 1-5

 Importance of Accounting

• The primary role of accounting is to provide useful

information for decision-making purposes.

• Accounting is a means to an end, with the end being

the decision that is enhanced by the use of accounting
information.

• Accounting is “the language of business”.

 Importance of Accounting

Accounting is an information and measurement system that

identifies, records, and communicates an organization’s
business activities.
Types of Accounting Information

Financial Tax

Management
 Financial Accounting Information

• Financial accounting information

--- information describing the financial

resources, obligations and activities of an
enterprise for external decision makers.
 Financial Accounting Information

• External users of accounting information

Current or potential financial interest in the

firm

Not involved in the day-to-day operations

 External Users of Accounting Information

•Shareholders
•Creditors
•Directors
•Labor unions
•Governmental agencies
•Suppliers
•Customers
•External Auditors
Objectives of External Financial Reporting

Provide specific information about

economic resources, claims to resources,
and changes in resources and claims.

Provide information useful in assessing

amount, timing and uncertainty of future
cash flows.

Provide general information useful in

making investment and credit decisions.
Objectives of External Financial Reporting

The primary financial statements

Balance Income
Sheet Statement

Statement
of Cash
Flows
Management Accounting Information

• Management accounting information

--- information intended to assist internal

decision makers (specifically, managers) in
operating the business.
Users of Internal Accounting Information

• Chief executive officer (CEO)

• Chief financial officer (CFO)
• Vice presidents
• Business unit managers
• Plant managers
• Store managers
• Line supervisors
 Owners

Typical
Board of
Directors Simple
Organization
Chief Executive
Officer Chart
(CEO)

Business V.P. V.P. Chief

V.P
Unit Human Information Financial
Ethics
Managers Resources Services Officer (CFO)

Plant Plant
Managers Managers Controller Treasurer

Plant Plant
Accountants Accountants
Objectives of Management Accounting
Information

To help achieve
goals and
missions

To help evaluate
and reward
decision makers
 Opportunities in Accounting

Accounting information is in all aspects of our lives. The

majority of opportunities are in private accounting, where
employees work for a business. Public accounting
includes auditing, taxation, and advisory services.
 Artificial Intelligence and Data Analytics

• Artificial Intelligence (AI) uses software and can be

used to complete repetitive tasks such as entering
invoices and transaction data.

• Accountants are needed to help develop advanced AI

systems and analyze reports and graphics.

• Data analytics is a process of analyzing data to identify

meaningful relations and trends.

• Data visualization is a graphical presentation of data to

help individuals make informed business decisions.
 Learning Objective C2

Describe the importance of ethics

and GAAP.
 Integrity of Accounting Information
• In the mid-2000s, Fannie Mae was in severe financial
difficulty and desperately needed additional capital for
the company to survive.

• What factors prevented Fannie Mae from simply

providing potential lenders with misleading financial
statements to make the company look like a risk-free
investment?
 Integrity of Accounting Information

• The integrity of accounting information is

enhanced in three primary ways.

Institutional features

Professional organizations

Competence, judgment, and ethical behavior

 Institutional Features

Generally Accepted Accounting Principles (GAAP)

Financial Accounting Standards Board (FASB)
Securities and Exchange Commission (SEC)
Public Company Accounting Oversight Board

International Financial Reporting Standards (IFRS)

International Accounting Standards Board (IASB)
 Generally Accepted
Accounting Principles (GAAP)
Financial accounting is governed by concepts and rules
known as generally accepted accounting principles
(GAAP). GAAP wants information to have relevance and
faithful representation.

Relevant information Faithful representation

affects decisions means information
of users. accurately reflects
business results.
 Generally Accepted
Accounting Principles (GAAP)

• The FASB sets GAAP.

• Authority provided by the Securities and

Exchange Commission (SEC).

• The SEC is a U.S. government agency that

oversees GAAP by companies that sell stock
and debt to the public.
 International Standards
In today’s global economy, there is increased demand by external
users for comparability in accounting reports.
This demand often arises when companies wish to raise money from
lenders and investors in different countries.

International Accounting International Financial

Standards Board (IASB) Reporting Standards (IFRS)

An independent group Identify preferred accounting

(consisting of individuals practices
from many countries), issues
International Financial
Reporting Standards (IFRS)

Standards are similar to, but sometimes different from U.S. GAAP.
FASB and IASB are working to reduce differences.
 Conceptual Framework

• Objectives – provide useful

information to investors, creditors,
and others.
• Qualitative characteristics –
information has relevance and faithful
representation.
• Elements – defines items in financial
statements.
• Recognition and measurement –
criteria for an item to be recognized
as an element and how to measure it.
 Professional Organizations

American Institute of Certified Public Accountants

Institute of Management Accountants
Institute of Internal Auditors
American Accounting Association
Committee of Sponsoring Organizations of the
Treadway Commission (COSO)
 Competence, Judgment and
Ethical Behavior

Certified Public Accountant (CPA)

Certified Management Accountant (CMA)
Certified Internal Auditor (CIA)

Ethical behavior is the

cornerstone of the
accounting profession.
 Fraud Triangle

Three factors must exist for a person to commit fraud:

opportunity, pressure, and rationalization.

Envision a way to commit Fails to see the criminal

fraud with a low perceived nature of the fraud or
risk of getting caught justifies the action

Must have some pressure to

commit fraud, like unpaid bills
 Ethics, Fraud & Corporate
Governance

The early 2000’s was a time of unprecedented

business failures amid allegations of fraudulent
financial reporting. E.g. Enron, WorldCom,
HealthSouth, Adelphia Communications, Tyco
and Qwest.

Dennis Kozlowski, the former CEO

of Tyco, was sentenced to 8 1/3 to
25 years in prison for his
conviction for conspiracy,
securities fraud, and falsifying
records.
 Ethics, Fraud & Corporate
Governance

Corporate governance entails corporate

structures and processes for overseeing the
company’s affairs to ensure that the company is
being managed with the best interests of
shareholders in mind.
 Sarbanes–Oxley (SOX) --- 2002
Congress passed the Sarbanes–Oxley Act to help curb financial
abuses at companies that issue their stock to the public.
SOX requires that these public companies apply both accounting
oversight and stringent internal controls. The desired results
include more transparency, accountability, and truthfulness in
reporting transactions.
Dodd-Frank Wall Street Reform and
Consumer Protection Act --- 2010
The Act was designed to:
1.promote accountability and transparency in the
financial system,
2.put an end to the notion of “too big to fail,”
3.protect the taxpayer by ending bailouts, and
4.protect consumers from abusive financial services.
 Accounting Assumptions

Business Entity Assumption Going-Concern Assumption

A business is accounted for The business is presumed to
separately from other business continue operating instead of being
entities, including its owner. closed or sold.

Monetary Unit Assumption Time Period Assumption

Transactions and events are The life of a company
expressed in monetary, or can be divided into time periods,
money, units. such as months and years.
Accounting Assumptions
--- Business Entity

A business
entity is
separate from
the personal
affairs of its
owner.

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 Accounting Assumptions
--- Going-Concern Assumption

Now Future
Going-Concern Assumption

The business entity is assumed to

continue operations into the
foreseeable future instead of being
closed or sold.

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 Accounting Assumptions
--- Monetary Unit Assumption

Monetary Unit Assumption

We will only record accounting information that
can be expressed in monetary units, usually
dollars in the United States.

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 Accounting Assumptions
--- Time Period Assumption

Time Period Assumption

Presumes that the life of a company can be
divided into time periods, such as months and
years.

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 Accounting Principles

Measurement Principle Revenue Recognition Principle

(Cost Principle) 1. Recognize revenue when goods or
Accounting information is based on services are provided to customers
actual cost. Actual cost is and
considered objective. 2. at an amount expected to be
received from the customer.

Expense Recognition Principle Full Disclosure Principle

(Matching Principle) A company reports the details behind
A company records its expenses financial statements that would impact
incurred to generate the revenue users’ decisions in the notes to the
reported. financial statements.

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 Accounting Principles
--- Cost Principle

Cost Principle

Accounting information is based on

actual cost (historical cost). Actual
cost is considered objective.

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 Accounting Principles
--- Revenue Recognition Principle

Revenue should be
recognized at the
time goods are sold
and services are
rendered.

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 Accounting Principles
--- Expense Recognition Principle
(Matching Principle)

Expenses should be
recorded in the
period in which they
are used up to
generate the revenue
reported.

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 Accounting Principles
--- Full Disclosure Principle

Full Disclosure Principle

A company is required to report the details

behind financial statements that would
impact users’ decisions.

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 Accounting Constraints

Cost-benefit constraint
Only information with benefits of disclosure greater
than the cost need be disclosed.

Materiality constraint
Only information that would influence the decisions of
a reasonable person need be disclosed.

Conservatism and industry practices are

sometimes included as a constraint, also.

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 Forms of Business Organization

Sole
Proprietorships Partnerships Corporations

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Characteristics of Businesses

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 Proprietorship
What are some advantages?
--total undivided authority
--no restrictions on type of business –
must be legal

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 Partnerships
 What are some advantages?
--better credit standing – possibly
--more brain power, but consultation with
partners required

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 Corporation
 What are some advantages?
--separate legal existence
--limited liability of stockholders
--transferability of ownership relatively easy

 What are some disadvantages?

--taxes – possible double taxation
--extensive governmental regulation

Advantages
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 Learning Objective A1

Define and interpret the

accounting equation and each
of its components.

© McGraw-Hill Education 1-51

Introduction to Financial Statements

Balance Sheet
Three primary
Income Statement
financial
Statement of Cash Flows statements.

We will use a corporation to describe these

statements.
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Introduction to Financial Statements

Balance Sheet
Describes the
financial
Income Statement position of a
company at a
Statement of Cash Flows
specific date.

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Introduction to Financial Statements

Balance Sheet

Income Statement
Depicts the
revenue and
Statement of Cash Flows expenses for a
designated
period of time.

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Introduction to Financial Statements

Balance Sheet

Income Statement

Statement of Cash Flows

Depicts the
ways cash has
changed during
a designated
period of time.

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 A Starting Point: Statement of
Financial Position
Vagabond Travel Agency
Balance Sheet
December 31, 2020
Assets Liabilities & Owners' Equity
Cash $ 22,500 Liabilities:
Notes receivable 10,000 Notes payable $ 41,000
Accounts receivable 60,500 Accounts payable 36,000
Supplies 2,000 Salaries payable 3,000
Land 100,000 Total liabilities $ 80,000
Building 90,000 Owners' Equity:
Office equipment 15,000 Capital stock 150,000
Retained earnings 70,000
Total $ 300,000 Total $ 300,000

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 Assets
Vagabond Travel Agency
Balance Sheet
December 31, 2020
Assets Liabilities & Owners' Equity
Cash $ 22,500 Assets
Liabilities:are economic
Notes receivable 10,000 resources
Notes payable that $ are41,000
Accounts receivable 60,500 Accounts payable 36,000
Supplies 2,000 owned
Salaries by the 3,000
payable
Land 100,000 business
Total liabilitiesand are
$ 80,000
Building 90,000 Owners' Equity:
Office equipment 15,000 expected
Capital stock to benefit 150,000
future operations.
Retained earnings 70,000
Total $ 300,000 Total $ 300,000

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Assets

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 Assets
Cash
Accounts Notes
Receivable Receivable
Resources
owned or
Vehicles controlled
by a Land
company

Store Buildings
Supplies
Equipment

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 Liabilities

Vagabond Travel Agency

Balance Sheet
December 31, 2011
Liabilities are
Cash
Assets Liabilities & Owners' Equity
$ 22,500 Liabilities:
debts that
Notes receivable 10,000 Notes payable $ 41,000
Accounts receivable 60,500 Accounts payable 36,000
represent
Supplies 2,000 Salaries payable 3,000
negative future
Land
Building
100,000 Total liabilities
90,000 Owners' Equity:
$ 80,000

cash flows for the

Office equipment 15,000 Capital stock 150,000
Retained earnings 70,000
enterprise.
Total $ 300,000 Total $ 300,000

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 Liabilities

Accounts Notes
Payable Payable

Creditors’
claims on
assets
Taxes Wages
Payable Payable

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 Owners’ Equity
Vagabond Travel Agency
Balance Sheet
December 31, 2011
Assets Liabilities & Owners' Equity
Owners’ equity
Cash $ 22,500 Liabilities:

represents the
Notes receivable
Accounts receivable
10,000
60,500
Notes payable
Accounts payable
$ 41,000
36,000
owners’ claims on
Supplies
Land
2,000
100,000
Salaries payable
Total liabilities
3,000
$ 80,000
the assets of the
Building 90,000 Owners' Equity:
Office equipment 15,000 Capital stock 150,000
business. Retained earnings 70,000
Total $ 300,000 Total $ 300,000

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 Owners’ Equity

Owner’s
claims
on
assets

Capital
Retained Earnings
Stock

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 Owners’ Equity

 Increases in owner’s equity

• Investments of cash or other assets by owners
• Earnings from profitable operation of the business

 Decreases in owner’s equity

 Payments of cash to owners or withdraws by owners
 Losses from unprofitable operation of the business

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 Liability vs Owners’ Equity

Type of fund Equity Liability

Sources of fund Owners Creditors
Cost of fund Dividends Interests
Principal
No Yes
repayment
Claims Residual claims Priority claims

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 Transaction Analysis
and the Accounting Equation
The Accounting Equation

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 The Expanded Accounting
Equation

Assets = Liabilities + Equity

Owner _ Owner _
Capital Withdrawals + Revenues Expenses

Net Income

Owner's Equity
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 In-Class Discussion

Based on your own experience, can you prepare an

individual's personal balance sheet? List all your
assets, liabilities and equities, if there is any. Discuss
it with your classmates.

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 Learning Objective P1

Analyze business transactions

using the accounting equation.

© McGraw-Hill Education 1-69

The effects of
business
transactions
on accounting
equation

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 Transaction 1:
Chas Taylor invests $30,000 cash to
start a company named FastForward.
FastForward is a proprietorship..
The accounts involved are:
(1) Cash (asset)
(2) C. Taylor, Capital (equity)
 Accounting Equation:
Chas Taylor invests $30,000 cash to start
the business, Fast Forward.
Assets = Liabilities + Equity
Accounts Notes C.Taylor,
Cash Supplies Equipment Payable Payable Capital
(1) $ 30,000 $ 30,000

$ 30,000 $ - $ - $ - $ - $ 30,000

$ 30,000 = $ 30,000

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 Transaction 2:

Company purchased supplies paying

$2,500 cash.

The accounts involved are:

(1) Cash (asset)
(2) Supplies (asset)

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 Accounting Equation:
Company purchased supplies paying
$2,500 cash.
Assets = Liabilities + Equity
Accounts Notes C.Taylor,
Cash Supplies Equipment Payable Payable Capital
(1) $ 30,000 $ 30,000
(2) (2,500) $ 2,500
Accounting Equation
must remain in balance!!

$ 27,500 $ 2,500 $ - $ - $ - $ 30,000

$ 30,000 = $ 30,000

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 Transaction 3:

Purchased equipment for $26,000 cash.

The accounts involved are:

(1) Cash (asset)
(2) Equipment (asset)

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 Accounting Equation:

Purchased equipment for $26,000 cash.

Assets = Liabilities + Equity

Accounts Notes C.Taylor,
Cash Supplies Equipment Payable Payable Capital
(1) $ 30,000 $ 30,000
(2) (2,500) $ 2,500
(3) (26,000) $ 26,000 Accounting Equation still
remains in balance!!

$ 1,500 $ 2,500 $ 26,000 $ - $ - $ 30,000

$ 30,000 = $ 30,000

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 Transaction 4:

Purchased supplies of $7,100 on credit.

The accounts involved are:

(1) Supplies (asset)
(2) Accounts Payable (liability)

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 Accounting Equation:

Purchased Supplies of $7,100 on credit.

Assets = Liabilities + Equity

Accounts Notes C.Taylor,
Cash Supplies Equipment Payable Payable Capital
(1) $ 30,000 $ 30,000
(2) (2,500) $ 2,500 Accounting Equation still
(3) (26,000) $ 26,000 remains in balance!!
(4) 7,100 $ 7,100

$ 1,500 $ 9,600 $ 26,000 $ 7,100 $ - $ 30,000

$ 37,100 = $ 37,100

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 Transaction Analysis

Now, let’s look at transactions

involving revenues, expenses and
withdrawals.

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 Transaction 5:
Provided consulting services to a customer
and received $4,200 cash right away.

The accounts involved are:

(1) Cash (asset)
(2) Revenues (equity)

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 Accounting Equation:
Provided consulting services to a customer
and received $4,200 cash right away.

Assets = Liabilities + Equity

Accounts Notes C.Taylor,
Cash Supplies Equipment Payable Payable Capital Revenue
Bal. $ 1,500 $ 9,600 $ 26,000 $ 7,100 $ 30,000
(5) 4,200 $ 4,200

$ 5,700 $ 9,600 $ 26,000 $ 7,100 $ - $ 30,000 $ 4,200

$ 41,300 = $ 41,300

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 Transactions 6 and 7:

Paid rent of $1,000 and

salaries of $700 to employees.

The accounts involved are:

(1) Cash (asset)
(2) Rent expense (equity)
(3) Salaries expense (equity)
Remember that the balance in
the Expense accounts actually But, total Equity decreases,
increase. because expenses reduce
equity.

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 Accounting Equation:
Paid rent of $1,000 and
salaries of $700 to employees.
Assets = Liabilities + Equity
Accounts Notes C.Taylor,
Cash Supplies Equipment Payable Payable Capital Revenue Expenses
Bal. $ 5,700 $ 9,600 $ 26,000 $ 7,100 $ 30,000 $ 4,200
(6) (1,000) (1,000)
(7) (700) $ (700)

$ 4,000 $ 9,600 $ 26,000 $ 7,100 $ - $ 30,000 $ 4,200 $ (1,700)

$ 39,600 = $ 39,600

Remember that expenses decrease equity.

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 Transaction 8:

Provided consulting services of $1,600 and rents

facilities for $300 to a customer for credit.

The accounts involved are:

(1) Accounts receivable (asset)
(2) Consulting Revenues (equity)
(3) Rental Revenue (equity)

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 Accounting Equation:
Provided consulting services of $1,600 and rents
facilities for $300 to a customer for credit.
Assets = Liabilities + Equity
Accounts Accounts C.Taylor,
Cash Receivable Supplies Equipment Payable Capital Revenue Expenses
Bal. $ 4,000 $ 9,600 $ 26,000 $ 7,100 $ 30,000 $ 4,200 (1,700)
(8) 1,900 $ 1,600
300

$ 4,000 $ 1,900 $ 9,600 $ 26,000 $ 7,100 $ 30,000 $ 6,100 $ (1,700)

$ 41,500 = $ 41,500

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 Transaction 9:

Client in transaction 8 pays $1,900 for

consulting services from account receivable.

The accounts involved are:

(1) Cash (asset)
(2) Accounts receivable (asset)

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 Accounting Equation:
Client in transaction 8 pays $1,900 for consulting services.

Assets = Liabilities + Equity

Accounts Accounts C. Taylor,
Cash Receivable Supplies Equipment Payable Capital Revenue Expenses
Bal. $ 4,000 1,900 $ 9,600 $ 26,000 $ 7,100 $ 30,000 $ 4,200 (1,700)
(9) 1,900 (1,900) $ 1,600
300

$ 5,900 0 $ 9,600 $ 26,000 $ 7,100 $ 30,000 $ 6,100 $ (1,700)

$ 41,500 = $ 41,500

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 Transaction 10:

Pays $900 as partial payment for supplies

purchased in transaction 4.

The accounts involved are:

(1) Cash (asset)
(2) Accounts payable (liability)

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 Accounting Equation:
Pays $900 as partial payment for supplies purchased in
transaction 4.
Assets = Liabilities + Equity
Accounts Accounts C.Taylor,
Cash Receivable Supplies Equipment Payable Capital Revenue Expenses
Bal. $ 5,900 0 $ 9,600 $ 26,000 $ 7,100 $ 30,000 $ 4,200 (1,700)
(10) (900) (900) $ 1,600
300

$ 5,000 0 $ 9,600 $ 26,000 $ 6,200 $ 30,000 $ 6,100 $ (1,700)

$ 40,600 = $ 40,600

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 Transaction 11:
Withdrawal of Cash $200 by Owner.

The accounts involved are:

(1) Cash (asset)
(2) Withdrawals (equity)
But, total Equity
Remember that the decreases because
Withdrawal account withdrawals cause
actually increases (just like equity to go down !!
our Expenses account . . . )

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 Accounting Equation:
$200 cash is withdrawn by owner.

Assets = Liabilities + Equity

Accounts Accounts C.Taylor, C.Taylor,
Cash Receivable Supplies Equipment Payable Capital Withdraw als Revenue Expenses
Bal. $ 5,000 0 $ 9,600 $ 26,000 $ 6,200 $ 30,000 $ 4,200 (1,700)
(11) (200) (200) $ 1,600
300

$ 4,800 0 $ 9,600 $ 26,000 $ 6,200 $ 30,000 $ (200) $ 6,100 $ (1,700)

$ 40,400 = $ 40,400

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Summary of Transactions

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The effects of business transactions on
accounting equation
The accounting equation MUST remain in
balance after each transaction.

Assets = Liabilities + Equity

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 Learning Objective P2

Identify and prepare basic

financial statements and explain
how they interrelate.

© McGraw-Hill Education 1-94

 Financial Statements
Let’s prepare the Financial Statements
reflecting the transactions we have recorded.
1. Income Statement
2. Statement of Owner’s Equity
3. Balance Sheet
4. Statement of Cash Flows

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Financial Statements

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 Income Statement
The income statement describes a company’s revenues
and expenses along with the resulting net income or
loss over a period of time due to earnings activities.

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 Statement of Owner’s Equity
The statement of owner’s equity reports information about
how equity changes over the reporting period.

Net income
from the income
statement.

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 Balance Sheet

The balance sheet describes a company’s financial

position at a point in time.

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 Statement of Cash Flows

Operating activities include the cash effects

of revenue and expense transactions.

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 Statement of Cash Flows

Investing activities include the cash effects of

purchasing and selling assets.

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 Statement of Cash Flows

Financing activities include the cash effects

of transactions with the owners and
creditors.

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 Relationships Among Financial
Statements

Date at Date at end

beginning of of period
period
Time

Balance Sheet Balance Sheet

Income Statement
Statement of Cash Flows

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Financial
Statements
and Their Links

(cont. next slide)

104
Financial
Statements
and Their Links

105
Financial Reporting and Financial
Statements
Financial statements are
just one source of
Income
financial accounting Statement
information. Balance
Sheet
Statement of
Cash Flows

Other Information:
•Nonfinancial disclosures
•Management interpretation
•Industry
•Competitors
•National economy
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 Learning Objective A2

Compute and interpret return

on assets.
 Return on Assets

Return on assets (ROA) is stated in ratio form as net

income divided by the average total assets invested.

Net income
Return on assets =
Average total assets

Where Average total assets = (Beginning total assets + Ending total assets) / 2

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 Class exercise 1
Use the accounting equation to compute the missing financial statement amounts.
Assets = Liabilities + Equity
Bose $150 = $30 +
Vogue = $100 + $300

Use the expanded accounting equation to compute the missing financial statement amounts.
+ Owner, - Owner, + Revenues - Expenses
Assets = Liabilities + Equity
Capital Withdrawals
Tesla $200 $80 $120 $100 $0 ($40)
YouTube $400 $160 $240 $220 $120 ($90)
 Class exercise 2
Assume Tata began operations on January 1 and completed the following transactions during its first month of
operations.

Jan. 1 Jamsetji invested $4,000 cash in the Tata company.

Jan. 5 The company purchased $2,000 of equipment on credit.
Jan. 14 The company provided $540 of services for a client on credit.
Jan. 21 The company paid $250 cash for an employee’s salary

Arrange the following asset, liability, and equity titles in a table: Cash; Accounts Receivable; Equipment;
Accounts Payable; J. Tata, Capital; J. Tata, Withdrawals; Revenues; and Expenses.
 Class exercise 3
Prepare the (a) income statement, (b) statement of owner's equity, and (c) balance sheet, for Apple using the following
condensed data from its fiscal year ended September 26, 2015.

Accounts payable $35,490 Investments and other assets $230,039

Other liabilities 135,634 Land and equipment (net) 22,471
Cost of sales 140,089 Selling, general and other expenses 40,232
Cash 21,120 Accounts receivable 16,849
Owner, Capital, September 27, 2014 111,547 Net income 53,394
Withdrawals in fiscal year 2015 45,586 Owner, Capital, September 26, 2015 119,355
Revenues 233,715

Income Statement Statement of Owner’s Equity Balance Sheet

Assets Detail of Assets
Liabilities Detail of Liabilities
Equity: Beginning Capital
+ Owner investments + Owner investments
- Owner withdrawals - Owner withdrawals Ending Owner, Capital
+ Revenues Detail of Revenues ± Net income (loss)
- Expenses Detail of Expenses Ending Capital
Net income (loss)
End of Chapter 1

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