Accounting intro
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Accounting intro Presentation Transcript

  • 1. ACCOUNTING INTRO
  • 2. THE ACCOUNTING EQUATION Assets = Liabilities + Owner’s Equity Assets – anything of value a business owns  Cash, equipment, buildings Accounts Receivable – amount your customers owe you
  • 3. LIABILITIES & OWNER’S EQUITY Debts of the business Most common is Accounts Payable  What your company owes to creditors The total amount of assets minus liabilities gives you the net worth of the business or owner’s equity.
  • 4. EXAMPLE Jenny has a store with assets of $64,000 Jenny has total liabilities of $21,000 Jenny’s equity in the business is $43,000 The net worth of Jenny’s business is $43,000 Assets ($64,000) = Liabilities ($21,000) + Owner’s Equity ($43,000)
  • 5. DOUBLE ENTRY ACCOUNTING Debits are on the left Credits are on the right For assets/expense accounts  Debits increase the balance  Credits decrease the balance For liability and revenue accounts  Debits decrease the balance  Credits increase the balance