Chapter 1, Problem 1.2BP

(a)

To determine

Accounting Equation:

Accounting equation refers to the equation which is based on the double entry system of accounting. This implies that if there is a change in the assets of the entity, there will be a corresponding effect on the liabilities or stockholder’s equity of the entity also. The accounting equation is as follows:

$\text{Assets}=\text{Liabilities}+\text{Stockholder's}\text{Equity}$

Financial statement:

Financial statements are condensed summary of transactions communicated in the form of reports for the purpose of decision making. The financial statements reports, and shows the financial status of the business. The financial statements consist of the balance sheet, income statement, statement of retained earnings, and the cash flow statement.

To Prepare: The tabular analysis of transactions for the month ended August 31, 2015.

(b)

To determine

To prepare: The income statement, retained earnings statement and balance sheet for the month of August.