Accounting Equation
Things that a business owns that is expected to bring future economic benefits
Assets
Which accounts are affected if... The owner contributed more cash into the business, $2000
Bank and Capital increases
What is any business activity that changes assets, liabilities, or owner's equity
a transaction
Which accounts will be affected if the business received loan from bank, $5 000
Bank and Loan
A business that performs an activity for a fee
a service business
Which element of the Accounting Equation does Accounts Payable belong to?
Liability
Receiving cash. Explain how this affects the accounting equation.
increases an asset
A person or business to whom a liability is owed
creditor/ Accounts payable
The process of planning, recording, analyzing, and interpreting financial information
accounting
A business owned by one person
soul proprietorship
The amount remaining after the value of all liabilities is subtracted from the value of all assets.
owner's equity/ capital
Receive a cash investment from owner. Explain how this affects the accounting equation.
Owner's equity increases and bank (asset) increases
If only one entry is made to the equation, the equation is ...
unbalanced/wrong
Which accounts will be debited and credited if the owner withdrew cash for personal use, $500
Credit bank of $500 and debit Drawings (or capital) of $500
Which accounts will be debited or credited if the business paid $1 500 of accounts payable?
Accounts payable will be debited, Bank will be credited
Future obligation of a business that is expected to take away future economic benefits.
Liabilities
Paid cash for supplies. Explain how this affects the accounting equation.
Increases expenses (supplies) and decreases assets (bank)
Bought supplies on account. Explain how this affects the accounting equation.
Supplies increases (expenses) and money owed on accounts payable(liability) increases
How will accounts will be affected if the business sold an office desk costing $250 for $200?
Bank will go up by $200, Office equipment will go down by $250, Expenses will go up by $50.
Goods or Funds withdrawn from business for personal use
drawings
Things that the business spends money on that will result in a decrease in equity (other than drawings by the owner).
Expenses
Paid cash for insurance. What will be debited and credited.
insurance debited and cash credited
Paid cash on account. Explain how this affects the accounting equation.
What is Cash (asset) decreases and amount owed on accounts payable (liability) decreases
Which accounts will be affected if the business bought a new computer costing $5 000 in cash.
Bank and Office Equipment
Which accounts will be affected by this transaction: Received $2 500 for accounts receivable.
Bank and Accounts receivable