Definition and Explanation of Accounting Equation

The following tables show the Debt/Equity Ratios before and after both exchanges based on book value of debt. As it is observed, the transactions did not significantly alter the

Samuelson believes that the assets definition should concentrate upon property rights that are concerned with wealth, which provides a true balance sheet orientation, rather than being concerned with revenue generation, Samuelson’s definition may lead to an exit value orientation for assets. One of the key points about the property rights approach lies in exchangeability of the asset. Samuelson’s viewpoint would result in certain deferred charges being expensed immediately even though their incurrence may bring about future economic benefits.

Each Friday, the cash clerk records the amount of cash receive and deposit the money in the bank account. Each quarter, the controller requests information from the bank necessary to prepare bank reconciliation.

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.

PART A: Cost of goods sold = = = = PART B: Net Profit = Gross Profit – Operating Expenses Cost of merchandise available for sale – cost value of ending inventory ($260,000 + $500,000) - $275,000 $760,000 - $275,000 $485,000

For the cash account to decrease and the profit to decrease, the transaction occurring could have been a/an:

In chapter eight there was information on the accounting equation. I feel this information is something everyone should be aware of. These deals with people’s finances and everyone should be aware of those. Accounting equation means Assets = Liabilities + Owners Equity. Assets are anything that is valuable to the firm. Liabilities are things

6. Forman, Inc. owns machinery with a cost of $250,000. Its estimated useful life is 10 years and a $30,000 salvage value.

We have to pay especial attention to the agreement reached with the former Co-owner of the company, Mr. Verden. This agreement is affecting the cash flow of the company since the interest expenses raises by around $12,000.00 more per year, this together the financial interest of the Metropolitan’s Bank loan

The accounting equation is, Assets are equal to Liabilities plus Stockholders’ Equity. Assets are resources owned by a business. Liabilities are the debts and obligations of the business. Liabilities represent claims of creditors on the assets of a business. Stockholders’ equity represents the claims of owners on the assets of the business. This equity is divided into two parts: common stock and retained earnings. The balance sheet reports assets and claims to assets at one specific point in time. Claims to assets are subdivided into two categories: claims of creditors and claims of owners. The accounting equation must always balance. Each transaction has a dual effect on the equation. As an example if an individual asset is increased,

Profit=selling price per unit X quantity sold – VC per unit X quantity sold-total fixed costs =(CM)X quantity sold – fixed costs.

¹ R185 000 (20 000 x R9,25) + R150 000(20 000 x R7,50) + R50 000 (20 000 x R2,50*)

marginal cost – so that the sale still produces a positive contribution to fixed costs.

If the profit on sales revenue is 20% then profit on cost will become 25%(20%/80%)

cost-of-goods-sold section might be in relation to the sales total. In the case of a merchandising firm,