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Unformatted text preview: 1-1The Accounting Equation is:AAssets = Liabilities + Owners' EquityBAsets = LiabilitiesCAssets = Liabilities + RevenueDAssets = Revenue - expensesEAssets + Liabilities = Owners Equity1-2CashNote PayableEquipmentCommon StockRetained Earnings1-3WagesCost of Goods SoldInventorySalesRent1-4Prepaid InsuranceAccounts payableAccounts receivableWages payableSecurity Deposit (we paid this to another company)1-5Current Assets are:AEqual to current liabilitiesBCash and inventories onlyCAssets which are expected to be turned into cash within one yearDCash and inventories and cost of goods soldECash and inventories and equipment1-6Current Liabilities are:A. By definition, Bad ThingsBEqual to Current Assets - expenses for the periodCLiabilities that are due now or even overdue for paymentDEqual to long-term liabilities - Owners' EquityEA liability that will have to be paid within one year1-7If the total Assets of a company are $500,000, the Liabilities are AEqual to $500,000 + the Owners EquityB$500,000...
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- Spring '10