Which one of the following represents the expanded basic accounting equation?
information about cash receipts and cash payments of a company. Which one of the following represents the expanded basic accounting equation? Assets + Dividends + Expenses = Liabilities + Common stock + Retained Earnings + Revenues.
What reflects the accounting equation?
The balance sheet is also known as the statement of financial position and it reflects the accounting equation. The balance sheet reports a company’s assets, liabilities, and owner’s (or stockholders’) equity at a specific point in time.
Where is revenue in the accounting equation?
Wait a minute…the accounting equation is ASSETS = LIABILITIES + EQUITY and it does not have revenue or expenses… where do they fit in? Revenue – Expenses equals net income. Net Income is added to Equity at the end of the period.
How do revenues and expenses affect the basic accounting equation?
(Figure)How do revenues and expenses affect the accounting equation? Assets = Liabilities + Equity; Revenues increase equity, while expenses decrease equity.
Which of the following is basic accounting equation?
The basic accounting equation, also called as the balance sheet equation, represents the relationship between the assets, liabilities and capital of a business. Following is the accounting equation: Asset = Liability + Capital.
When an owner makes a withdrawal?
Definition: An owner’s withdrawal, sometimes called a distribution, is a payment of cash or assets from a partnership or sole proprietorship to one of its owners. In other words, an owner’s withdrawal is when an owner takes money out of the company for personal use.
What are the four basic accounting equations?
“Show me the money!” There are four main financial statements. They are: (1) balance sheets; (2) income statements; (3) cash flow statements; and (4) statements of shareholders’ equity.
What are the two accounting equations?
Based on the definitions of the concepts “income” and “expenses,” the basic accounting equality can be represented as follows: Assets = Liabilities + Capital + Revenues – Expenses.
What are the components of accounting equation?
The three categories of accounts that are part of the accounting equation are assets, liabilities, and owner’s equity. Assets are what a company owns.
What is expense formula?
Rearranging the equation, if we know total revenues and net income, we can calculate total expenses by taking total revenues and subtracting net income.
How do you solve accounting equations?
What is the basic accounting equation?Assets = Liabilities + Equity.Liabilities = Assets – Equity.Equity = Assets – Liabilities.Assets = Liabilities + Owner’s Equity + Revenue – Expenses – Draws.
What are the three primary sources of assets?
The three primary sources of assets are (1) investments by owners (issue of stock), (2) borrowing from creditors, and (3) earnings activities.
What is an expense in the accounting equation?
(An expense is a cost that is used up or its future economic value cannot be measured.) Although owner’s equity is decreased by an expense, the transaction is not recorded directly into the owner’s capital account at this time.
Are expenses under Owners equity?
Expenses cause owner’s equity to decrease. Since owner’s equity’s normal balance is a credit balance, an expense must be recorded as a debit. (At a corporation, the debit balances in the expense accounts will be closed and transferred to Retained Earnings, which is a stockholders’ equity account.)