aimenathan_week1exercise.doc - Week 1 Assignments...

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Week 1 Assignments Exercise #1 The framework used to record and summarize the economic activities of a business enterprise is referred to as the accounting equation. State the basic accounting equation and define its major components. How are business transactions and financial statements related to the accounting equation? Assests = Liabilities + Owner’s Equity Assests: resources a business owns Liabilities: creditor claims on total assests Owner’s Equity: the ownership claim on total assests Each business transaction must have a dual effect on the accounting equation. Financial statements are created using the basic accounting equation. Exercise #2 Use the accounting equation to answer the following questions. 1. West Wind Sails Co. has total assets of $120,000 and total liabilities of $35,000. What is owner’s equity? $85,000 2. Mercy Family Center has total assets of $225,000 and owner’s equity of $105,000. What are total liabilities? $120,000
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This note was uploaded on 01/08/2012 for the course BUSN 310 taught by Professor Alex during the Spring '11 term at American Public University.

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aimenathan_week1exercise.doc - Week 1 Assignments...

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