Accounting Basics
What is an asset?
Something owned of value
What does GAAP stand for?
Generally accepted accounting principals.
When the owner invests initial capital of $10000 in the company, what happens to owner's equity?
goes up
Tell us the Accounting equation
assets=liabilities+ owner's equity
Prepaid insurance is which type of account?
Asset
What is a liability?
Something that is owed.
What is the name given to an account?
account title
when the owner invests $10000 initial money in the company, what happens to assets in the account equation?
it goes up
A bank loan is what type of account?
Liability
The difference between assets and liabilities is called what?
equity or net worth
What is capital?
Money or investment
when the owner invests $10000 initial amount into the company, what happens to liabilities in the accounting equation?
It is not affected....nothing
What type of account is affected when the owner takes withdrawal from the company.
Owner's equity
__________________ is called the language of business
accounting
income earned from the sale of product or service of the company is called what?
revenue
What does A L O E stand for?
The items in the accounting equation:
assets = liabilities + owners equity
Accounts payable is what type of account?
Liability
The accounting equation must always stay in ________________________
balance
amount used to creating the company's product or service is this type of account.
expense
What is double entry accounting?
For every transaction there are two accounts affected
Accounts receivable is what type of account?