RelativeResourceManager

RelativeResourceManager - Fundamental Accounting Equation...

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Fundamental Accounting Equation Assets = Liabilities + Owners Equity (Capital) Assets = anything a business owns , even if it is not paid for. Liabilities = anything a business owes . The creditors share of the assets. Owners equity = the owners share. Typical Assets 1. Cash = this includes paper money, coin, checks. 2. Accounts receivable = money owed to the business from sales on account . You want to convert account receivable to cash. 3. Supplies = quickly consumed and inexpensive. In the office and stores. Ex: Pens, pencils, plastic bags, etc. 4. Pre-paid assets = insurance, rent. They are paid for in advance , and are short lived assets. 5. Inventory = merchandise we buy or make to sell. 6. Equipment = long life and expensive. Ex: Vehicles, furniture fixtures, machinery. 7. Building. 8. Land Any business could have all these assets or just some. Typical Liabilities (What we owe) 1. Notes Payable = written promise to pay . (Written) 2. Accounts Payable = the money we owe to suppliers for purchases on account. (Oral) 3. Taxes Payable = to the state or the government. 4. Wages Payable = pay for the workers. 5. Unearned revenue = Ex: When someone pre-pays for a ball game or theater.
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Owners Equity 1. Sole proprietorship = one owner, not a corporation. 2. Partnership = two or more owners, not a corporation. 3. Corporation = a separate legal entity created by the state. (To protect your personal assets). The Theory of Debits and Credits Rules: 1. Debit is on the left side of an account. 2. Credit is on the right side of the account. 3. When referring to Assets only debits means plus (+) and credit means minus (-). 4. When referring to liabilities and capital (owners equity) debit means minus (-) and credit means plus (+). 5. The three forces that affect capital. RED R = Revenue, sales, every business sells something + (credit). E = Expenses, heat, lights, salaries – (debit). D = Drawing, to withdraw for personal use – (debit).
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The Accounting Cycle 1. Journalize. 2. Post. 3. Trial Balance. 4. Worksheet. 5. Statements: Income, Capital, Balance Sheet. 6. Journalize and post worksheet adjustment. 7. Journalize and post closing entries. 8. Post (after) closing Trial Balance. Worksheet The worksheet is a tool that helps us make statements. The steps to make a worksheet: 1. Copy the trial balance into columns 1 and 2 on the worksheet. 2. Make the necessary adjustments in column 3 and 4 . (This is a correction to make it right). 3. Sort everything from the first 4 columns and put it into the last 4 columns . A. The likes we add. B. The unlikes we subtract. 4. Compute the net income. Place the net income in two spots, into the smaller sides of both statements. Depreciation is always an expense.
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RelativeResourceManager - Fundamental Accounting Equation...

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