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•INFORMATION SYSTEMS AND ACCOUNTING The recording of business transactions Finance and Accounting Department •THE RECORDING OF BUSINESS TRANSACTIONS Content: 1. The incidence of accounting events 2. The accounting method 3. The accounting period: going concern principle and accrual adjustment entries •ASSETS, LIABILITIES, AND NET EQUITY Assets are resources controlled by the company from which future economic benefits are expected. Examples include cash, accounts receivable, property, plant, and equipment. Liabilities are obligations with third parties, which assets will be used to settle at the expiration date. Examples include payables to suppliers, financial institutions, and taxes payable. Net equity (also called stockholders’ equity or equity) is the residual amount after deducting liabilities from assets. It represents the owners’ wealth, increasing with revenues and owner contributions, and decreasing with expenses and withdrawals. •THE ACCOUNTING EQUATION AND COMPONENTS Assets = Liabilities + Net equity For example: 1,000 = 600 + 400 (Assets = Liabilities + Net equity) Components of net equity include: • Capital (owners’ contributions) •...