The Accounting Equation Flashcards
(12 cards)
Assets =
Assets = Liabilities + Capital
what are assets?
assets are resources owned/controlled by a business and are expected to provide future economic benefits
examples of assets
building, furniture and fittings, cash at bank, cash in hand, machinery, inventory, land
what is an accounts receivables?
anyone who owes the business money for goods supplied to them.
what is an accounts payables?
when the business owes suppliers money for goods supplied to them
what are liabilities?
liabilities are amounts owed by the business to individuals, organizations or businesses
what are examples of liabilities?
mortgages, loans, accounts payables, bank overdrafts
are liabilities bad?
no they are necessary
what is a bank overdraft?
when more money is withdrawn than what the business actually has in its bank account. The bank account goes into negatives.
what is capital?
capital is the owner’s investment to the business and also refers to assets used to generate income or value
what is capital also known as?
owner’s equity
what are the three ways the accounting equation can be expressed?
Assets = Capital + Liabilities
Capital = Assets - Liabilities
Liabilities = Assets - Capital
