Accounting Equation Assets= Liabilities + Stockholders' Equity

Common Stock

Amount paid by shareholders to purchase shares (ownership) in a company Normal Balance= Credit Financial Statement= Balance Sheet Permanent Account Typical Account Number= 300s

Expenses

Costs that are ordinary and necessary in order to generate Revenue Normal Balance= Debit Financial Statement=Income Statement Temporary Account Typical Account Number= 500s for Cost of Goods Sold; 600s for Operating Expenses

Liabilities

Creditors claims against assets (obligations of the company) Financial Statement=Balance Sheet Typical Account # =200s

Revenues

Earnings from what the company "does for living "-(activities provided by the company for goods or services in order to earn income) Normal Balance=Credit Financial Statement= Income Statement Temporary Account Typical Account=400s

Assets

Resources a business owns (items that provide future value) normal balance=debit financial statement= Balance Sheet Typical Account #= 100s

Retained Earnings

Retained Earnings are comprised of three items: Revenues (increase r/e) Expenses (decrease r/e) dividends (decrease r/e) Normal Balance= Credit Financial Statement= Balance Sheet & Statement of Owner's Equity Permanent Account Typical Account Number=300s

Stockholders' Equity

Shareholders' claims against assets (Assets-liabilities) also called net equity Equity is compromised of two items: Common Stock Retained Earnings

Dividends

A distribution of earnings to company shareholders (owners) Normal Balance=Debit Financial Statement= Statement of Retained Earnings Temporary Account Typical Account Number=300s