The Accounting Equation Flashcards
Learn the accounting equation
The key principle behind the _______ _______: stuff the business owns equals the stuff the business owes.
accounting equation
The key principle behind the accounting equation: stuff the business _______ equals the stuff the business _______.
owns, owes
The key principle behind the accounting equation: stuff the business owns _______ the stuff the business owes.
equals
Stuff the business owns is called _______.
assets
Stuff the business _______ is called assets.
owns
Stuff the business _______ is called liabilities when it is owed to third parties, but it is called equity when owed to owners (or shareholders).
owes
Stuff the business owes is called _______ when it is owed to third parties, but it is called equity when owed to owners (or shareholders).
liabilities
Stuff the business owes is called liabilities when it is owed to _______ _______, but it is called equity when owed to owners (or shareholders).
third parties
Stuff the business owes is called liabilities when it is owed to third parties, but it is called _______ when owed to owners (or shareholders).
equity
Stuff the business owes is called liabilities when it is owed to third parties, but it is called equity when owed to _______ (or _______ ).
owners (or shareholders)
What is the accounting equation?
Assets = Liabilities + Equity
List seven examples of assets.
(1) cash (2) accounts receivable (3) inventory (4) plant, property, and equipment (4) land and buildings (5) investments (7) goodwill
What does A/R stand for?
accounts receivable
What does PPE stand for?
plant, property, and equipment
What does L&B stand for?
land and buildings
List four examples of liabilities.
(1) accounts payable (2) loans payable (3) wages payable (4) taxes payable
What does A/P stand for?
accounts payable
List two examples of equity.
(1) owner’s/shareholder’s equity (2) retained earnings
What does R/E stand for?
retained earnings
_______ _______ are profits held for future use.
Retained earnings
Retained earnings are _______ held for future use.
profits
Retained earnings are profits held for _______ _______.
future use
The _______ _______ is one of the three main financial statements (along with the income statement and cash flow statement). It is a snapshot of your assets, liabilities, and equity at a single point in time.
balance sheet
What does B/S stand for?
balance sheet
The balance sheet is one of the three main _______ _______ (along with the income statement and cash flow statement). It is a snapshot of your assets, liabilities, and equity at a single point in time.
financial statements
The balance sheet is one of the three main financial statements (along with the _______ _______ and _______ _______ _______). It is a snapshot of your assets, liabilities, and equity at a single point in time.
income statement and cash flow statement
The balance sheet is one of the three main financial statements (along with the income statement and the cash flow statement). It is a snapshot of your _______, _______, and _______ at a single point in time.
assets, liabilities, and equity
