Professional Documents
Culture Documents
Business Activities:
1. Operating Activities (A): Collecting payments (cash, accounts receivable),
purchasing short-term assets for day-to-day operation (inventories,
supplies), manufacturing and delivering goods, paying suppliers (L)(cost of
goods sold)
2. Investment Activities (A): Buying and selling long-term assets (long-term
investment advertisement, plants and buildings, land, equipment)
3. Financing Activities (L, SE): Borrowing or paying back money to creditors
(cash, accounts payable), receiving capital (common stock, additional
paid-in capital)from stockholders, paying dividends
Current liabilities
Short-term accounts payable, short-term notes payable, accrued expenses
payable (wages payable, dividends payable, interest payable), unearned revenue /
deferred revenue
Long-term liabilities
Long-term accounts payable, Long-term notes payable
Stockholders equity
terms of net assets
Common stock ($k par per share x no. of shares = total monetary amount),
additional-paid in capital, retained earnings
*Cost of goods sold / inventories expense is only recognized when goods are
sold - not equal to the price sold!!
Service is rendered
Dr: Unearned revenue (-L)
Cr: Revenue (+SE)
Cash is received
Dr: Cash (+A)
Cr: Receivables (-A)
Supplies situation:
Cash is paid
Dr: Supplies (+A)
Cr: Cash (-A)
Cash is paid
Dr: Payables (-L)
Cr: Cash (-A)