ac 210 - chapter 2

resources presently owned by a business that generate future economic benefit

Assets

balance sheet formula

Assets = Liabilities + Stockholders' Equity

every transaction has at least two effects on the basic accounting equation

Duality of Effects

exchanges involving assets, liabilities, and stockholders' equity that you can see between the company and someone else

External Exchanges

events occurring within the company, for example, using some assets to create an inventory product

Internal Events

amounts presently owned by a business to creditors

Liabilities

the amount invested and reinvested in a company by its shareholders

Stockholders' Equity

___ assets will be used up or converted into cash within the next 12 months

current

current ratio

current assets/current liabilities

liability accounts ___ on the right or ___ side and ___ on the left or ___ side

increase, credit decrease, debit

stockholders' equity accounts ___ on the right or ___ side and ___ on the left or ___ side.

increase, credit decrease, debit

asset accounts ___ on the left or ___ side and ___ on the right or ___ side

increase, debit decrease, credit

___ assets include resources that will be used or turned into cash more than 12 months after the balance sheet date

long-term

a ___ is a business activity that affects the basic accounting equation

transaction