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By Carl S. Warren, James M. Reeve, Jonathan Duchac

New to this version, the authors created leading edge, precise content material providing actions which are best-suited for every aspect within the studying method. New content material just like the author-written Activation routines, is helping scholars come to type extra ready, and permits them to extra simply attach the dots, improve their intensity of information and feature larger instruments for remediation and assessment. the top target of Warren/Reeve/Duchac’s textual content and know-how studying procedure is to turn on studying and create extra empowered and ready students--ready to tackle the remainder of their academic and profession targets. on hand with InfoTrac® scholar Collections http://gocengage.com/infotrac.

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Exp. – Exp. +25,000 25,000 +1,350 +1,350 25,000 1,350 25,000 +7,500 7,500 1,350 –950 400 25,000 7,500 –2,125 –2,125 –800 –800 25,000 7,500 –2,125 –800 400 400 25,000 25,000 –2,000 –2,000 7,500 –2,125 –800 –800 –800 7,500 –2,125 –800 –800 –450 –450 –275 –275 –450 –275 –450 –275 –450 –275 The four types of transactions affecting owner’s equity are illustrated in Exhibit 5. Exhibit 5 Owner’s Equity Types of TransacƟons Owner’s Investments Owner’s Withdrawals Revenues Expenses Net Income (Net Loss) © Cengage Learning 2014 Types of Transactions Affecting Owner’s Equity Example Exercise 1-3 Transactions Salvo Delivery Service is owned and operated by Joel Salvo.

That is, you received an asset and incurred a liability to pay a future bill. NetSolutions entered into a similar transaction by purchasing supplies for $1,350 and agreeing to pay the supplier in the near future. This type of transaction is called a purchase on account and is often described as follows: Purchased supplies on account, $1,350. The liability created by a purchase on account is called an account payable. Items such as supplies that will be used in the business in the future are called prepaid expenses, which are assets.

Exp. –2,125 –800 –450 –275 400 25,000 7,500 –800 –2,125 –800 –800 –450 –275 400 25,000 7,500 Transaction H Nov. 30, 2013 Chris Clark withdrew $2,000 from NetSolutions for personal use. At the end of the month, Chris Clark withdrew $2,000 in cash from the business for personal use. This transaction is the opposite of an investment in the business by the owner. Withdrawals by the owner should not be confused with expenses. Withdrawals do not represent assets or services used in the process of earning revenues.

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