Now that we understand the fundamentals around recording transactions using the expanded accounting equation, in this chapter, we will be learning how to apply these fundamentals to a range of different scenarios including selling goods to customers to pay later, purchasing and later selling inventory, managing bank loans and rewarding shareholders for their investment.
Each section in this chapter will follow the structure below:
- Understanding the business event/transaction
- Translate the business transaction into accounting terminology
- Record the accounting transaction.
for all of the types of business transactions and events that we will describe.