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| LO1 – Identify the effect of debit and credit transactions on asset, liability, and shareholders’ equity accounts. |
Chapter 1 reviewed the analysis of financial transactions and the resulting impact on the accounting equation. We now expand that discussion by introducing the way transaction is recorded in an account. An account accumulates detailed information regarding the increases and decreases in a specific asset, liability, or shareholders’ equity item. Accounts are maintained in a general ledger. We now review and expand our understanding of asset, liability, and shareholders’ equity accounts.
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