Accounting Equation
The Accounting equation is a very short and simple equation: Assets = liabilities + Owners Equity, for corporations it will be Assets = Liabilities + Stockholders Equity. It allows us to b e able to see how all three accounts work together.
1. Assets are what the company or we own. (Cash, Supplies, Prepaid Insurance, Accounts receivable, Inventory, prepaid insurance, Equipment)
2. Liabilities what the company owes. (notes or loans payable, accounts payable, salaries and wages payable, interest
payable, and income taxes payable)
3. Owners Equity is the difference between Assets and Liabilities (capitol)
4.Revenue is then amount of money a company makes (Sales)
5.Expenses is the cost required for something; the money spent on something. (Anything with expense behind it)
6.Cost Merchandise is the price a business pays for goods it purchases to sell. (Inventory, Gross Profit)
1. Assets are what the company or we own. (Cash, Supplies, Prepaid Insurance, Accounts receivable, Inventory, prepaid insurance, Equipment)
2. Liabilities what the company owes. (notes or loans payable, accounts payable, salaries and wages payable, interest
payable, and income taxes payable)
3. Owners Equity is the difference between Assets and Liabilities (capitol)
4.Revenue is then amount of money a company makes (Sales)
5.Expenses is the cost required for something; the money spent on something. (Anything with expense behind it)
6.Cost Merchandise is the price a business pays for goods it purchases to sell. (Inventory, Gross Profit)