Accounting Equation
Liabilities + Owner's Equity =
assets
Paying cash. Explain how this affects the accounting equation.
decrease in an asset
Any business activity that changes assets, liabilities, or owner's equity
a transaction
A formal report that shows what an individual owns, what an individual owes.
Statement of financial position
A business that performs an activity for a fee
a service business
Accounts payable
liability
Receiving cash. Explain how this affects the accounting equation.
increases an asset
A person or business to whom a liability is owed
creditor/ trade 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 cash (asset) increases
If only one entry is made to the equation, the equation is ...
unbalanced/wrong
A planned process designed to compile financial data and summarize the results in accounting records and reports
accounting system
division of ledger
sales ledger
purchases ledger
general/------------------------ledger
nominal ledger
The amount remaining after the value of capital is subtracted from the value of all assets.
Liabilities
Paid cash for supplies. Explain how this affects the accounting equation.
Increases assets (supplies) and decreases assets (cash)
Bought supplies on account. Explain how this affects the accounting equation.
What is Supplies/ inventory increases (asset) and money owned on account /trade payble(liability) increases
Financial reports that summarize the financial condition and operations of a business
financial statements
Goods withdrawn from business for personal use
drawings
If Assets is equal to $650,000 and Capital is equal to $490,000. How much is Liabilities?
$160,000
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 account/ trade payble (liability) decreases
The statement which gives profit/ loss of the business
Statement of profit or loss/ income statement
An entry at both both side of the cash book, which shows payment of cash and receipt of cash
contra entry