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.