If you now borrow $500o from the bank foryour business. You have $10,000 that youplaced in your bank account, plus another$5000 from the bank, for a total of $15,000in your bank account. Since you owe thebank $5000, you have taken on a liability of$5000.Equityunchangedatremains$10,000. Thus,Assets =Liability +Equity: 15,000 = 5,000 + 10,000 (balanced)
If you now borrow $5000 from the bank for your business. You have $10,000 that you placed in your bank account, plus another $5000 from the bank, for a total of $15,000 in your bank account. Since you owe the bank $5000, you have taken on a liability of $5000. Equity remains unchanged at $10,000. Thus, • Assets = Liability + Equity • 15,000 = 5,000 + 10,000 (balanced)
Your business receives revenue $10,000 from thesales you make, and these sales bring aboutexpenses, $4,000. Income will increase the equityof the business, while expenses will decrease theequity of the business.If the profit is $6,000cash,thenAssets=15,000+6,000Liability+Equity=5,000+10,000+(10,000-4,000)Assets-Liability+OwnersEquity+Revenues-Expenses
Your business receives revenue $10,000 from the sales you make, and these sales bring about expenses, $4,000. Income will increase the equity of the business, while expenses will decrease the equity of the business.If the profit is $6,000 cash,then Assets=15,000+6,000 Liability+Equity=5,000+10,000+(10,000-4,000) Assets=Liability+Owners’ Equity+RevenuesExpenses
ExpansionoftheAccountingEquationPaid-in capitalAssetsLiabilitiesXRetained EarningsDividends十OwnersRevenuesEquityExpenses
Expansion of the Accounting Equation Assets Owners’ Equity Liabilities Owners’ Equity Liabilities + Paid-in capital + Retained Earnings – Dividends + Revenues – Expenses
TheAccount and Double-EntryAccountingAccountDouble- Entry Accounting
The Account and Double-Entry Accounting Account Double- Entry Accounting
AccountTheaccount is the basic summary device ofaccounting, which is the detailed record ofthe changes that have occurred in a particularfinancial element during a period of timeAccounts are grouped in six broad categories.according to the elements
Account The account is the basic summary device of accounting, which is the detailed record of the changes that have occurred in a particular financial element during a period of time. Accounts are grouped in six broad categories, according to the elements