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Describe the two primary functions of financial accounting -The functions of financial accounting are to measure business activities

of a c ompany -and to communicate information about those activities to investors and creditor s and other outside users for decision-making purposes. Identify the three fundamental business activities that financial accounting mea sures. -Financing=are transactions involving external sources of funding. There are two basic sources of this external fundingXthe owners of the company who invest thei r own funds in the business, and creditors who lend money to the company. With t his financing, the company engages in investing activities. -investing=include the purchase and sale of (1) long-term resources such as land , buildings, equipment, and machinery and (2) any resources not directly related to a company's normal operations. Once these investments are in place, the comp any has the resources needed to run the business and can perform operating activ ities. -operating=include transactions that relate to the primary operations of the com pany, such as providing products and services to customers and the associated co sts of doing so, like utilities, taxes, advertising, wages, rent, and maintenanc e. Discuss how financial accounting information is communicated through financial s tatements. -income statement, shows the net income or net loss of a company -revenue- expense, R> E . .net income, R< E .. net loss -prepare the statement of stockholder equility->common stock + (net income ( thi s period ) - dividend =retained earning) balance sheet-asset = liability + equailty 2000 asset -everything company ownes liability -account payable -everything company owned equailty -common stock + retained earning c=5000 b=5000 a=21000 f=9000 22000 l=3000 d=3000 e=10000 Chapter 2 -journal entry A=L+E -Debit=Credit -asset , debit account .. if it increases .. it goes to debit side (left) ..if i t decreases , it goes to credit side (right) -L+E, credit account.. If it increase.. it goes to the credit side (right) . . i f it decreases, it goes to the debit side(left) -asset: cash, account receivable, note receivable, land, equipment, supplies, fu rniture

a=L+e E=common stock + retained earning Retaining earning = R -E -dividend Reveneue ... increase .. credit . .decrese ..debit expense .. increse ..debit . .decrease . .credit -prepaid expense is asset -unearned revenue -liabilty assets-resources owned Liabilites-amounts owed stockholders's equity- owners claims to resources dividents- distrubution to stockholders revenue-amounts earned from sales products or services. expenses- costs of selling products or services, Income statement- Profitibilty of a company Statement of stockholders equaity- Change in owners claims to resources Balance sheet- Resources equal creditors and owners claims to those resources Statement of cash flows- Change in cash as a result of operating investing, and financing activities Income statement-Revenue earned from sales to customers during the year . Statement of stockholders equity-The change in retained earnings due to net inco me and dividends. Balance sheet-Total amounts owed to workers at the end of the year Statement of cash flows- Amount of cash reciveed from borrowing money from a loc al bank. A,L,E=balance sheet Revenue and expense= income statement 5/1 dr : storeage building 5000 cr: note payable 5000 5/6 dr: account recievable 1800 cr: sales revune 1800 5/12 dr: expense 1200 cr: cash 1200 5/17 dr: note payable 1000 cr: cash 1000 5/25 dr: supplies 800 cr: cash 800