In order to generate financial information, a business needs to establish an accounting system in which to keep the accounting records. Some small enterprises keep a simple cash-based accounting system, but many businesses record transactions using a system known as double-entry bookkeeping. When you have studied this chapter, you should be able to: Explain the accounting equation. Describe and apply the principles of double-entry bookkeeping. Balance the ledger accounts. Prepare a trial balance. Discuss the limitations of a trial balance.
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