Assets
What is a current asset?
This asset is cash or will become cash within one year.
What is a liability?
Money the business owes.
What is capital?
Owner’s investment in the business.
State the accounting equation.
Assets = Liabilities + Equity
Inventory is classified as what type of asset?
Current asset
Give two examples of current assets.
Cash, Accounts Receivable, Inventory, Supplies
What is a current liability?
A liability due within one year.
The formula for equity.
Assets – Liabilities
If assets increase by $5,000 from a loan, what increases?
Liabilities
Accounts Payable is what type of liability?
Current liability
Equipment and buildings are examples of what type of asset?
Non-Current Assets
Give two examples of current liabilities.
Accounts Payable, Wages Payable, Short-term Loan
If total assets are $250,000 and total equity is $100,000, calculate total liabilities.
$150,000
If equipment is purchased with cash, what happens?
Assets increase (equipment) and decrease (cash); total assets stay the same.
Land is classified as what?
Non-current asset
Where do you find assets on the balance sheet?
Top
What does capital increase with? Debit or Credit
Credit
How do drawings affect equity?
Decreases equity.
Assets = $180,000
Liabilities = $95,000
Calculate Equity.
$85,000
A bank loan due in 5 years is what?
Non-current liability
What is another name for non-current assets? What is a non-current (long-term) asset?
Fixed Assets
This asset is not expected to be used up within one year.
If total liabilities are $30,000 and assets are $80,000, what is equity?
$50,000
If assets = $120,000 and liabilities = $45,000, what is equity?
$75,000
Assets = $95,000
Equity= $35,000
Calculate Liabilities
Liabilities = $60,000
Why is the balance sheet called a “snapshot”?
It shows financial position at one specific date.