Assets = Liabilities + Equity
Assets: (things a business owes)
- cash
- accounts receivable
- office supplies
- bldg.
- land
Liabilities: (things business owes to creditors)
- accounts payable
- loan/mortgage payable
Equity: (what's left for owners of business)
- in corporation, equity is made up of:
- common stock + retained earnings
Rules for something.
1. the equation must be in equal balance at all times.
2. each transaction b
3.
1. Acme Corp. is formed by shareholders (stockholders) contributing $10,000 cash to corp. & crop. issuing common stock to shareholders
2. Acme performs landscaping services for a client & receives $21,000 cash
3. Acme pays rent expense for this month of $5,000
4. Acme changes $5,000 of fertilizer (all used this month) from fertilizers 'r' us
5. Customers change $1,000 of services from Acme
Assets ( cash + accounts recievable)
1) CASH +$10,000
2) CASH +$21,000
3) < $5,000 >
4)
5) AR +$1,000
Liabilites + Stockholder's Equity (CS or RE)
1) COMMON STOCK +$10,000 (SE/ CS)
2) SALES +$21,000 (SE/RE)
3) RENT EXPENSE < $5,000 >
4) + Accounts payable +$5,000
5)
DEBIT:
Cash 10,000
Cash 21,000
Rent expense %,000
Fertilizer Expense 5,000
Credit
Common Stock 10,000
Sales 21,000
Cash 5,000
Cash 5,000
example 1
example 3
