The Accounting Equation Flashcards
A tangible or intangible resource that has economic value, owned by a person or organization.
Asset
A financial statement that marks a company’s financial situation at a moment in time, showing all assets, liabilities and owners’ equity.
Balance Sheet
The person or organization to whom a debt or obligation is owed.
Creditor
The financial claims on a company’s assets.
Equities
A debt or obligation owed to any other person or organization.
Liability
When money is given to an individual or business in exchange for future repayment of the principal amount plus interest.
Loan
The difference between an individual’s assets and liabilities.
Net Worth
A statement that shows the relationship between an individual’s assets, liabilities, and equity.
Net Worth Statement
The owner’s rights to the assets of a business after all liabilities have been paid.
Owners’ Equity
The equation showing the relationship between assets, liabilities, and owner’s equity of a company, shown as: Assets = Liabilities + Owners’ Equity
The Accounting Equation