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7 Cards in this Set
- Front
- Back
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Shows the equality between the resources and the claims on the resources.
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The accounting equation.
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B.The accounting treatment of all business transactions is based on the accounting equation:
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Assets = Liabilities + Owner’s Equity
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Economic resources owned by a business that are expected to be of benefit in the future.
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Assets.
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Creditor’s claims to the assets. Liabilities are obligations to outsiders.
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Liabilities.
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The owner’s claim to the assets. It is the amount of assets that remains after subtracting the liabilities.
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Owner’s Equity.
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Is increased by owner investments and revenues, which are amounts earned by delivering goods or services to customers.
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Owner’s Equity.
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Is decreased by owner withdrawals of assets from the business and expenses. Expenses occur when assets are used or liabilities increase as a result of earning revenues.
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Owner’s Equity.
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