Chapter 1 How we stay in balance examples

Chapter 1 How we stay in balance examples - Statement...

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Assets must always equal liabilities + owners equity If we borrow cash, assets go up from getting cash and liabilities go up because we sign a note payable If we sell equipment for cash, assets go up from getting cash and go down from getting rid of the equipment If we sell common stock for cash, assets go up from getting cash and owners equity goes up from having more common stock outstanding If we pay an accounts payable off, assets go down from getting rid of cash and liabilities go down because the A/P goes away If we purchase new equipment and finance it, assets go up from getting a new asset and liabilities go up from signing a note payable If we do tax work for someone on account, assets go up from getting the accounts receivable and owners equity goes up BECAUSE revenue went up which increased net income which increases retained earnings (part of owners equity) If we pay the phone bill with cash, assets go down from getting rid of cash
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