Tuesday, February 19, 2013

Accounting Equation

ASSETS = LIABILITIES + OWNER'S EQUITY

Assets - Properties (Resources) of value owned by a business.

Liabilities - Debts, amounts owed to creditor

Ownership - Is the exclusive right to posses, use, enjoy, and dispose or property.

Equity - Is the owner's contributions to the business.
Equity represents the noncurrent obligations of the entity to the owners. Because equity equals the amount of assets remaining after subtracting liabilities.
Equity is sometimes called net assets. (the term "net" indicates that at least one amount has been subtracted from another to reach this final amount).

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