Accounting Equation

Terms

100

Also known as Capital

Owner's Equity

200

Financial obligations of the business.

Liability

300

It is the residual interest of the business.

Capital or Owner's Equity

400

Anything of value that is owned by the business.

Asset

500

It is the process of identifying, recording, analyzing and interpreting financial information.

Accounting

Accounting

100

What is the Accounting Equation?

Asset = Liabilities + Owner's Equity

200

Give one example of asset.

Cash, Building, Land, Accounts Receivable, Intangible Assets, Equipment, etc.

300

What is the expanded formula for Accounting Equation?

Asset = Liability + Capital (Revenue - Expense)

400

When revenue is greater than expenses, we will get __.

Net Income.

500

Accounts Payable is an example of __

Liabilities

Transactions

100

The owner invest cash in the business. What is the effect to the accounting equation?

Asset Increase 

Capital Increase

200

The owner received cash from bank loan.

Asset Increase 

Liability Increase

300

The owner purchased equipment with cash.

Asset Increase (Equipment)

Asset Decrease (Cash)

400

Which of the following will cause the Capital to decrease?  (Revenue, Investment, or Withdrawal)

Withdrawal

500

A decrease in Owner's Entity resulting from the operation of a business is called __.

Expenses