The Accounting Equation
What is the accounting Equation?
Assets = Liabilities + Owners Equity
What are assets Increased by and decreased by?
Debits-Increase
Credit-Decreases
What is trial balance?
A report that lists the balances of all general ledger accounts of a company at a certain point in time.
What is owner's equity?
the share of a company's net assets that the owner or owners can claim as their own
what does the rules of debit and credit enforce
The accounting equation (ASSETS = LIABILITIES + EQUITY)
What goes on the debit side of a trial balance
Assets and expense accounts
Whats Important about the Accounting Equation?
captures the relationship between 3 elements: Assets, liabilities and equity
what side is credited?
The Right
what causes the trial balance to not balance
only having one side of a double entry
Which financial statements uses the accounting equation?
The balance sheet or the statement of financial position
What side are debits Recorded?
Left side of the Journal
What is the purpose of the Trial Balance?
Prepare balance sheets,and other Statements
What does the Accounting equation show?
the sum of a company's liabilities and shareholders' equity are equal to its total assets
Do the rules of debit and credit apply to all companies?
Yes
what types of accounts are included in a trial balance?
Assets,Liabilities,equity,revenues and expenses