Ch. 1 The Accounting Equation

Factors of liabilities

Accounts Payable

Factors of assets

Cash Accounts Receivable Supplies Equipment

Expenses

Costs of providing products and services to customers

Define: Liabilities

Creditors' claims on assets; debts

Owner Investments

Inflows of resources that an owner puts into a company

Net Loss

Occurs when expenses exceed revenues; decreases equity

Net Income

Occurs when revenues exceed expenses; increases equity

Equity

The owner's claim on assets, and is equal to assets minus liabilities.

The Accounting Equation

Assets = Liabilities + Equity

Owner Withdrawals

Outflows of resources that an owner takes from the company

Factors of equity

Owner Investments Owner Withdrawals Revenues Expenses

Factors that INCREASE equity

Owner Investments Revenues

Factors that DECREASE equity

Owner Withdrawals Expenses

Define: Assets

Resources a company owns Something I own, has value, and benefits the future

Revenues

Sale of products and services to customers