Accounting Basics
This is the accounting equation.
What is Assets = Liabilities + Equity?
Cash is this type of account.
What is an Asset?
Cash increases on this side.
What is Debit?
This statement shows profit.
What is the Income Statement?
Take out a $300 loan → What account is credited?
What is Notes Payable?
This represents money invested by the owner.
What is Owner’s Equity?
Accounts Payable is this type of account.
What is a Liability?
Revenue increases on this side.
What is Credit?
This statement shows what a business owns and owes.
What is the Balance Sheet?
Owner invests $500 → What account is credited?
What is Owner’s Equity?
This happens to liabilities when a business takes out a loan.
What is they increase?
Equipment belongs to this category.
What is an Asset?
Buy supplies for $100 cash (Supplies side).
What is Debit Supplies $100?
This statement calculates ending equity.
What is the Statement of Owner’s Equity?
Assets = $1,500, Liabilities = $700 → Correct Equity?
What is $800?
This formula is used to calculate net income.
What is Revenue – Expenses?
Owner investment belongs to this category.
What is Equity?
Earn $200 cash (Revenue side).
What is Credit Service Revenue $200?
Net income in this problem: Revenue $1,000, Expenses $600.
What is $400?
If a balance sheet doesn’t balance, this part is usually incorrect.
What is Owner’s Equity?
This type of account increases with a credit and represents earnings.
What is Revenue?
A loan is classified as this.
What is a Liability?
Pay $50 for rent (Expense side).
What is Debit Rent Expense $50?
Ending equity: Beginning $500, Net Income $400, Withdrawals $200.
What is $700?
Assets = $2,000 and Liabilities = $500 → Missing Equity?
What is $1,500?