Accounting Equation
Accounting Equation:
Assets = Liabilities + Equity
Assets = Liabilities + Owner's Equity
(Equation Balance Sheet)
Profit = Revenue - Expenses
(equation Profit and Loss)
Explanation:
1. ASSETS
Current Assets is cash or other assets that are expected to be converted into cash or sold or used usually within 1 year or less
Liquid assets consist of :
- Cash ( Petty Cash and Bank )
- receivables
- Accounts Receivable
- Notes Receivable
- Due from Employees
- Interest Receivable
- Inventory
- Short-term Investments
- Consumables , such as paper , ink , etc. ( Office Supplies ) .
- Insurance
- Prepaid expenses ( office rent , etc. )
Fixed Assets
Intangible assets that are owned by a company is permanent or have a long life ( more than 1 year ) and used in the company
Tangible Fixed Assets
- Land
- Building ( depreciation )
- Equipment ( depreciation )
- AC , Fridge , Computer , Typewriter , Fan , Etc)
- Machine ( depreciation )
- Vehicle ( depreciation )
- Equipment ( depreciation )
- Tables, Chairs , and the Wardrobe
- Furniture and Furniture
- Guest Chair , Hanging Wall , Etc
Intangible Fixed Assets
- Goodwill ( Amortization )
- License ( amortization )
- Trademark ( amortization )
- Copyright ( amortization )
2. LIABILITY
It is the company's debt to outside parties ( debtor ) either short-term debt and long-term debt
Short-term debt :
- Accounts Payable
- Bank Debt
- Debt Notes
- Debt Salaries
- Debt Rent
- Interest Payable
- Debt Dividend
- Tax Debt
Long-Term Debt :
- Debt Bonds
3. Owner Capital ( Owner 's Equity )
It is the right of ownership of a company's assets after deducting total liabilities
- Capital Own ( cash or stock )
Assets = Liabilities + Equity
Assets = Liabilities + Owner's Equity
(Equation Balance Sheet)
Profit = Revenue - Expenses
(equation Profit and Loss)
Explanation:
1. ASSETS
Current Assets is cash or other assets that are expected to be converted into cash or sold or used usually within 1 year or less
Liquid assets consist of :
- Cash ( Petty Cash and Bank )
- receivables
- Accounts Receivable
- Notes Receivable
- Due from Employees
- Interest Receivable
- Inventory
- Short-term Investments
- Consumables , such as paper , ink , etc. ( Office Supplies ) .
- Insurance
- Prepaid expenses ( office rent , etc. )
Fixed Assets
Intangible assets that are owned by a company is permanent or have a long life ( more than 1 year ) and used in the company
Tangible Fixed Assets
- Land
- Building ( depreciation )
- Equipment ( depreciation )
- AC , Fridge , Computer , Typewriter , Fan , Etc)
- Machine ( depreciation )
- Vehicle ( depreciation )
- Equipment ( depreciation )
- Tables, Chairs , and the Wardrobe
- Furniture and Furniture
- Guest Chair , Hanging Wall , Etc
Intangible Fixed Assets
- Goodwill ( Amortization )
- License ( amortization )
- Trademark ( amortization )
- Copyright ( amortization )
2. LIABILITY
It is the company's debt to outside parties ( debtor ) either short-term debt and long-term debt
Short-term debt :
- Accounts Payable
- Bank Debt
- Debt Notes
- Debt Salaries
- Debt Rent
- Interest Payable
- Debt Dividend
- Tax Debt
Long-Term Debt :
- Debt Bonds
3. Owner Capital ( Owner 's Equity )
It is the right of ownership of a company's assets after deducting total liabilities
- Capital Own ( cash or stock )
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