Acc/300 Week One Accounting Equation

Revenue income is income generated by sales of goods or service done by a business for instance sale of goods to customers, rent received from debtors, commission received etc. Revenue income is money that comes into the business from performing its day by day

| (TCO 1) The Accounting Equation is used to develop the organization's financial reports. (1) Describe what assets value would be if Liabilities are $12,000 and Owners' Equity is $50,000 by showing the Accounting Equation (10 points), and (2) provide an example of two asset accounts that could contain the value. (10 points)

LIABILITY – The owner is held responsible for all debts and expenses accrued by the company via the concept of unlimited liability. If the expenses and debts aren’t satisfied, the owner of the business can be sued for breach of contract.

The net income on the income statement is used on the equity section for the balance sheet. When the net income increases of decreases because of revenue or expenses this carries over to the balance sheet under the equity section and reflects those fluctuations. This helps to give a better

The accounting equation: Assets = Liabilities + Owner’s Equity. Assets are the resources of the company. Examples include cash, land, buildings, and equipment. Liabilities are “outsider claims”, the company’s obligations to creditors. Examples include accounts payable, notes payable, and income taxes payable. Owner’s Equity represents “insider claims” of the company or the owner’s share of the assets. If a business is keeping accurate records this equation should always be in balance.

Reports revenues and expenses for a specific period of time. A firm's revenues, gains, expenses and losses are listed on the income statement. Revenue is money earned from a company’s

Background. Revenue is a financial statement item. Accounting for revenue contains standards and principles for revenue recognition. Revenue recognition rules and statutory requirements significantly evolved over the years. It became more detailed for the purpose so financial statement users can understand true company performance and projections.

Liabilities are obligations that are the responsibility of the company and can be in the forms of loans that the company needs to pay or services that the company still needs to provide (Merritt, 2016). Liabilities are broken down into two main categories, current liabilities and long term liabilities (McClure, n.d.). Current liabilities are those obligations that will come due within the next year, while long term liabilities typically come due in the future, but not within the next 12 months (McClure, n.d.).

Note that once the common terms cancel in the second equation (the DuPont model), the right-hand side

The company's financial health and stability are measured by the balance sheet and shows the amount of equity versus liabilities. Generating the total current assets of a company, total assets equal the calculation of cash ($50,000), and inventory ($34,000), and plus accounts receivable ($50,000), with the current assets equivalent of $134,000. Concurrent assets listed by Nybrostrand is only equipment (net of depreciation) $415,000, with the concurrent assets equaling $415,000. Total assets equals $549,000 from the sum of concurrent assets ($415,000) added to current assets ($134,000). The information solves the first half of the accounting equation ($549,000 = liabilities + equity). Liabilities are broken into two categories current and long-term liabilities. Current liabilities equal the figure of accounts receivable ($78,000) and property taxes ($16,900), with current liabilities sum being $94,900. Long-term liabilities there is only one long-term debt $127,000, meaning long-term liabilities are $127,000. Total liabilities figure ($221,900) is the computation of current liabilities and long-term liabilities.

Net income is total revenues minus total expenses incurred to generate those revenues all within the same reporting period. Net income is calculated by the accrual accounting methodology meaning that the expenses incurred to generate revenues are reported at the same time the related revenues are reported. Both revenue recognition and expenses paid may not coincide with actual cash transactions. Net cash from operating activities, on the other hand, is not determined by accrual but by

The amounts of money due to others that need to be paid now. Current liabilities mean you have to pay your entire budget within a year or so just depend on what they tell you. A long-term liability means you

The other main financial statement is the Balance Sheet. What, exactly, is in balance on a Balance Sheet? Assets and equities are in balance. Recall that liabilities are also equities: the equities of the creditors of the business. So the equation in balance is: Total Assets = Total Equities, where the total equities include both creditor equities (liabilities)

The income or the profit of a business is defined as “The increase in Net Assets measured by excess of Revenues over Expenses.” The term Net Assets means excess of Assets over Liabilities.

be used by all business 's as guide to how the company is doing financial and reviewed on a regular basis to make sure the assets and liabilities are in line with one another (balance sheets, n.d.). Total assets, total liabilities and shareholder equity make up the major accounts on a balance sheet. These three different accounts represent the companies assets in value, the outstanding debt in liabilities and finally the shareholder 's equity is the difference between the assets and the liabilities (Reeves, n.d.).