1 / 6

The Accounting Equation

The Accounting Equation. 1. What does a person require in order to begin a business?. Capital- Owner investment or outside investors Equipment, furniture, computers. Assets (own). 2. In general, the term given to all the above items is ____________

keala
Download Presentation

The Accounting Equation

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. The Accounting Equation

  2. 1. What does a person require in order to begin a business? • Capital- Owner investment or outside investors • Equipment, furniture, computers

  3. Assets (own) 2. In general, the term given to all the above items is ____________ 3. How does the business acquire the needed economic resources? a) ________________ b)___________________ creditors will have claims the owner will have claims against the economic against the economic resources. resources. Owner’s Equity (Owner’s Investment) Liabilities (Borrow)

  4. Owner’s Equity + Assets Liabilities = • The ACCOUNTING EQUATION: __________________________ ______________________ $100,000 $70,000 $30,000 5. The accounting equation is a: - Fundamental concept and basis for all accounting today

  5. Question: • On Sept. 15 of the current year, Donna Lyon began the practice of law under her name. Her business’s assets and liabilities on the date are as follows: • Accounts payable $200, Cash $800; Bank loan $1 200, Office Equipment $2 200; Law Books $2 400. • Determine the Owner’s Equity and construct an accounting equation that itemizes the three elements, A, L, & OE. Owner’s Equity + Assets Liabilities = Cash $800 Office Equipment $2,200 Law Books $2,400 Accounts Payable $200 Bank Loan $1200 - = $5,400 = $1,400 = $4,000

  6. Homework: • Answer Exercise #1-6 p. 20 (t), p. 6-7 (w)

More Related