Assets
What is a current asset?
This asset is cash or will become cash within one year.
What is a liability?
Money the business owes.
What is capital?
Owner’s investment in the business.
State the accounting equation.
Assets = Liabilities + Equity
Inventory is classified as what type of asset?
Current asset
Give two examples of current assets.
Cash, Accounts Receivable, Inventory, Supplies
What is a current liability?
A liability due within one year.
The formula for equity.
Assets – Liabilities
If assets increase by $5,000 from a loan, what increases?
Liabilities
Accounts Payable is what type of liability?
Current liability
Equipment and buildings are examples of what type of asset?
Long Term Assets
Give two examples of current liabilities.
Accounts Payable, Wages Payable, Short-term Loan
If total assets are $250,000 and total equity is $100,000, calculate total liabilities.
$150,000
If equipment is purchased with cash, what happens?
Assets increase (equipment) and decrease (cash); total assets stay the same.
Land is classified as what?
Long Term asset
Where do you find assets on the balance sheet?
Top
What does capital increase with? Debit or Credit
Credit
How do drawings affect equity?
Decreases equity.
Assets = $180,000
Liabilities = $95,000
Calculate Equity.
$85,000
A bank loan due in 5 years is what?
Long Term liability
What is another name for non-current assets? What is a non-current (long-term) asset?
Fixed Assets
This asset is not expected to be used up within one year.
If total liabilities are $30,000 and assets are $80,000, what is equity?
$50,000
If assets = $120,000 and liabilities = $45,000, what is equity?
$75,000
Assets = $95,000
Equity= $35,000
Calculate Liabilities
Liabilities = $60,000
Why is the balance sheet called a “snapshot”?
It shows the financial position at one specific date.