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PRINCIPLES OF ACCOUNTING I – REVIEW NOTESIn the back of your textbook, there is a section called Rapid Review which summarizes each chapter. If it hasbeen awhile since your last accounting course, please review this summary for chapters 1-12.Below are topics that you must understand before we get into Chapter 13:Accounting Equation1.Basic Accounting Equation:Assets = Liabilities + Equity2.Expanded Accounting Equation:Assets = Liabilities + Owner’s Capital – Owner’s Drawings + Revenues –Expenses.3.Assets, Liabilities and Owner’s Equitya.Assets: Resources a business owns. The business uses its assets in carrying out such activities asproduction and sales. Examples: Cash & Property, Plant & Equipment.b.Liabilities: claims against assets… existing debts and obligations. Example: Accounts Payablec.Owner’s Equity represents the ownership claim on total assets.i.Capital is the owner’s investment in the business.