This document provides an introduction to basic accounting concepts including the accounting equation, balance sheet, income statement, assets, liabilities, equity, revenue, expenses, and net income. It uses examples like tracking personal finances to demonstrate how to calculate assets, liabilities, equity, and how equity amounts change as revenue is added and expenses are deducted. Key terms are defined and accounting is framed as ensuring the basic accounting equation is always balanced.

1. The Basic Accounting Equation
Balance Sheet
Assets
Liabilities
Equity
Income
Statement
Revenue
Expense
Net Income

2. The Language of Accounting
How we speak

3. Study using a dictionary
• Make a list of words from the last slide.
• Look up each word in the dictionary
• Study a word and write down its meaning on
an index card
• You will add to each card as we learn more
about the words meaning.

4. The Accounting Equation
How many Coconuts do you have?

5. The Equation
•
• A = Assets
• L =
Liabilities
• OE =
Owners
Equity

6. Assets:

7. Make a list of your Assets.
What are the total assets?

8. Total Assets
Assets are what you own

9. Liabilities
• Visa/MC amounts
owing
• Car Loan
• Student Loan
• Line of Credit
• Mortgage

10. Make a list of your liabilities
What are the liabilities?

11. Equity
What is the Equity Amount?.

12. Total Liabilities & Equity
Assets are equal to Liabilities & Equity

13. Assets minus Liabilities = Equity
Can you determine your Equity.
Add up Assets Add up
Liabilities
Find the
difference
between assets
& Liabilities.
This equals
your Equity!

14. The Balance
• The equation MUST always balance!
Now that we have our starting point, we can begin to add
revenue and deduct expenses to see how our Equity will
increase or decrease..

15. Now, lets see how Net Worth
changes
• You start by adding accounts
• Then tracking amounts you earn
• Track amounts to be spent.
• We can see our Net Worth
increase or decrease

16. Revenue
Amounts that you earn, that are subject to
income tax.
• Wages
• Income from your second job
• Interest or dividends from investments

17. Expenses
The amounts that you pay from your income for
current bills every month.
• Heat
• Hydro
• Telephone
• Rent
• Cable
• Entertainment
• Clothing

18. How Equity Changes

19. Add Revenue Minus Expenses

20. The New Updated Balance Sheet

21. Always learn with the help of a
friend

22. Reference Sheet
Basic Accounting Equation Versions
http://www.foxstone.com.au/accounting-
wallchart.html July 1, 2013
Basic Liabilities Equation
http://www.motherjones.com/kevin-
drum/2009/05/taxonomy-consumer-credit
July 1,2013
Canadian Money http://www.ivany.org/cheap-
smartphone-plans-in-canada/ July 1, 2013
House & Car

23. Reference Sheet 2
Product Liability
http://www.richardmolin.com/specialty/produc
t-liability.html July 6, 2013
Payday loans
http://www.getrichslowly.org/blog/2011/09/12/
how-much-do-we-owe-others-and-when-
should-we-walk-away/ July 6, 2013
Debt
https://www.facebook.com/WorldOfDeception

24. Reference Sheet 3
Equity http://www.roninmortgage.com/is-a-
home-equity-loan-right-for-you/ July6, 2013
Money Tree
http://insidetradellc.com/blog/private-equity-
investing-a-growing-market/ July 6, 2013
Money Grows
https://www.google.ca/search?hl=en&site=im
ghp&tbm=isch&source=hp&biw=1391&bih=7
00&q=Equity&oq=Equity&gs_l=img.3..0l10.29
34.4328.0.13771.6.5.0.1.1.0.116.542.1j4.5.0..
..0...1ac.1.19.img.U53mfbFrYOo#facrc=_&im

25. Reference Sheet 4
Piggy bank with 50 dollars
https://www.google.ca/search?hl=en&site=im
ghp&tbm=isch&source=hp&biw=1391&bih=7
00&q=Equity&oq=Equity&gs_l=img.3..0l10.29
34.4328.0.13771.6.5.0.1.1.0.116.542.1j4.5.0..
..0...1ac.1.19.img.U53mfbFrYOo#facrc=_&im
gdii=_&imgrc=HkgFNyjCleOnXM%3A%3BGl
R5Hrh37Q43MM%3Bhttp%253A%252F%25
2Fwww.mariecopeland.ca%252Fimages%25
2Fbest-home-equity-
loan.jpg%3Bhttp%253A%252F%252Fwww.m