Week 1 Checkpoint 2- The Accounting Equation

Week 1 Checkpoint 2- The Accounting Equation - property on...

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Meredith Cleaners has the following balance sheet items. Classify each item as an asset, liability, or stockholders’ equity. Accounts payable- Liability Accounts receivable- Liability Cash- Asset/Equity Notes payable- Liability Cleaning equipment- Asset Salaries payable- Liability Cleaning supplies- Asset Common stock- Equity Write an explanation of the function of each element in the accounting equation, using 100 to 150 words. Assets are all of the items or things which make up a business or an organization. These items include the buildings, the cash on hand, the equipment that is housed in the buildings, and the
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Unformatted text preview: property on which the buildings sit. Anything that belongs to or is a part of the entity can be considered an asset. Liabilities are those things for which the entity has some sort of financial obligation. This could be the employee salaries, the cost for supplies, loans, or any other item that the entity must dole out cash. The owners or shareholders equity is any monetary profit that remains after all financial obligations have been accounted for, retained earnings, or common stock in the entity....
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