Acc Dis_1 - The Accounting Equation basically states that...

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The Accounting Equation basically states that Assets are equal to our liabilities and the owner’s equity. That means that our assets, things of value, is equivalent to the money we owe/have burrowed and the money we have put into the asset (Wainwright, 2012). The equation always stands true, even if money iscoming from many different shareholders. A few examples I have experienced are the obvious in a vehicle. Currently I have a 2015 Hyundai Sonata. We bought it for \$22,000 that would be what the asset is worth, I put \$10,000 down and got a loan for \$12,000. This is how it looks in the Accounting Equation. \$22,000 = \$12,000 + \$10,000Another that I have not yet experienced, but hope to in the near future is buying a house. I plan to get a house no more than \$200,000 so for this equation let’s say that I get the house for \$150,000. Let’s say I put down \$30,000 on the loan. My equation would look like this.\$150,000 = \$120,000 + \$30,000Wainwright (2012) states that “An account is the master record that is maintained for each individual financial statement asset, liability, equity, revenue, expense, or dividend component.” This tells us what an account is and some different classifications. Debit and Credit are opposites of each other. Debit is used to record an increase to a dividend account, expense, or asset, while credit is used to record a decrease to those. In liability, revenue, and equity accounts debit and credit do the complete opposite the debit decreased while the credit increases the accounts. Cash (asset account)Debit increases an Credit decreases anAsset Ex. Received \$ Asset Ex. Paid moneyNotes Payable (liability account)DebitCreditDecreases a liability Increased a liabilityEx. Repaid loanEx. Borrowed more
The cash flow statement is intended to show how cash is generated and expanded during a specific time

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Term
Spring
Professor
cruz
Tags
Generally Accepted Accounting Principles, Wainwright