Lesson Guide – Lesson 2

Learning Objectives

  • Group Elements of financial statements into the balance sheet and profit and loss statement
  • Record business accounts under the accounting equation
  • Classify accounting events into one of the following categories:

o  Asset source transactions

o   Asset use transactions

o   Asset exchange transactions

  • Prepare the profit and loss statement and balance sheet statement based on cash accounting
  • Differentiate between realization and recognition
  • Differentiate between an asset and an expense
  • Differentiate between cash and accrual accounting
  • Identify cash events and match to the appropriate section of the cash flow statement
  • Explain the accounting cycle and the closing process
  • Prepare the statement of changes in stockholders equity financial report


Lesson 2 Sequence

Click on the link below to assess the lessons.  Following the order set here will increase your understanding.

Grouping Elements of Financial Statements

Realization vs Recognition

Asset versus expense

Accrual versus cash basis video

The statement of cash flow

Cash flow statement video

Recording business event under the accounting equation

The accounting cycle

Statement of changes in stockholders equity

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