1.3 Basic Accounting Equation

Stockholders Equity

An ownership claim of an asset.

Liabilities

Claims against assets. (ex. existing Debts and Obligations)

Stockholders Equity balance sheet sections

Common Stock Retained Earnings

Expenses

Cost of used Assets/Services used in the process of earning Revenue

Common Stock

Describes amount paid in by stockholders for the shares they purchase in the company.

Retained Earnings

Determined by Revenues, Expenses, and dividends.

Dividends

Distribution of cash or assets to stockholders

Basic Accounting Equation

Assets= Liabilities + Stockholders Equity

Asset

Resource that a business owns. (I.E. equipment, cash, tables, property.

Revenues

gross increases in stockholders equity resulting from business activities.