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(1)
Transaction: The economic events which bring about any changes in the financial items of a business, and can be measured in the monetary units are referred to as transactions.
Accounting equation is expressed as shown below:
Assets = Liabilities + EquityAssets = Liabilities+{(Contributed capital)+(Retained earnings)}Assets = Liabilities+{(Common stock)+(Revenues–Expenses–Dividends)}
Income statement: The financial statement which reports revenues and expenses from business operations, and the result of those operations as net income or net loss for a particular time period is referred to as income statement.
Statement of
To analyze: The transactions of AP, using the accounting equation in the given format
(2) (a)
To prepare: Income statement of AP for the month ended March 31, 2018.
(b)
To prepare: Statement of retained earnings of AP for the month ended March 31, 2018.
(c)
To prepare: Balance sheet of AP on March 31, 2018.
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Chapter 1 Solutions
Horngren's Financial & Managerial Accounting, The Financial Chapters (6th Edition)
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