Assets
Anything of value that is owned.
What is an asset?
An amount owed to a business
liability
A business is that is owned by the owner
Owners equity
Income earned from the sale of a good or service
Revenue
Price paid goods for a business used to operate
Expense
Prepaid insurance, supplies, equipment, etc.
Why do assets require other assets or operate a business?
Accounts payable
Example of a liability
Subtracted from the assets
The amount remaining after the value of liability's
Revenue
example of sale
Generate any revenue
Expense must be incurred in order for a business.
Inventory, Investments, Cash and cash equivalents, Accounts Receivable etc.
What are examples of an asset?
Purchasing a building
Notes payable
Capital, and drawing accounts.
The most commonly classified as owner's equity.
Owner's equilty
is an increase for revenue
Advertising and utilities are
Examples of expenses
Assets = Liability + Owners Equity
What is the accounting equation?
Assets = Liabilities + Owners Equity + Revenue - Expense
What is the extended accounting equation?
Its the sum of its liabilities and its shareholders.
What does the accounting Equation do?
It provides an easy way to verify the accuracy of your bookkeeping.
Why is the accounting equation important?
It helps provide an easy way to have accuracy, and measure the profitability of your business keeping everything together.
What are the benefits using the accounting equation?
An asset where the company will receive from its costumers who have purchased goods
What is Accounts Receivable?
Due within the next 12 months
Current Liabilities
Important figure on a company's balance sheet, representing the amount of a company's value that can be claimed by its shareholders.
Owners equity
When a company receives payment from customers
Unearned Revenue
expense that will reduce income.
Bad Debit Expense