Unformatted text preview: uity
. Assets: Economic resources owned by a business or expected to benefit the business in the
Liabilities: Any obligations (debts) of a business to pay cash, transfer assets, or provide a service
to another entity in the future.
• Equity: The residual interest in the business; claims by the owners to the assets of the business
after all obligations have been satisfied. (Net Assets)
• Four types of transactions that affect equity: 400 Owner investments: Assets are contributed to the business by its owner(s)
• Owner withdrawals: Assets are withdrawn from the business by its owner(s)
Revenues: Increases in equity as a result of operations of a business (sales)
• Expenses: Decreases in equity (resources used up to help earn revenues) Communication of Financial Information:
Financial statements are the primary means of communicating financial info...
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