Accounting equations (assets, liabilities, equity )
Net Income
Occurs revenues exceed expenses. net income increases equity
Owners investments or Owner cap
Inflows of resources such as cash and other net assets that an owner puts into the company
Accounting equation
Assets = Liabilities + Equity
Expanded accounting equation
Assets = Liabilities + [Owner's Capital - Owner's Drawings + Revenues - Expenses]
Liabilities
Creditors claims on assets. These claims reflect company obligations to divide assets products or services to others
Expenses
decrease equity, via net income. From costs of providing products and services to customers
Revenues
Increase equity, via net income. From sales of products and services to customers
Owner withdrawls
Outflow of resources such as cash and other assets that an owner takes from the company for personal use
Equity
Owners claim on assets, (is = to assets - liabilities) equity is also called net assets or residual equity
Payable
Refers to a liability that promises a future outflow of resources. Examples are wages payable to workers, accounts payable to suppliers, notes payable to banks, and taxes payable to government
Assets
Resources a company owns or controls. The resources are expected to yield future benefits
Receivables
Term used to refer to an asset that promises A future inflow of resources. A company that provides a service or product on credit has an account receivable for that customer. On credit and on account imply that cash payment will occur at a future date
Net loss
The amount by which expenses exceed revenues, Which decreases equity.