ACCOUNTING

1
CHAPTER 3

• ACCOUNTING
• FOR A BUSINESS

2
Accounting Equation

• The elements of the accounting or balance
• sheet equation are
• Assets - resources (items) with a dollar value
  that are owned by a business
• Liabilities - what a company owes to its
  non-owners for assets, products or services and
• Capital - what the owner invests into the
  business.

3
Accounting Equation

• The accounting equation shows the relationships
  of the elements in accounting.
• To find Capital the equation will be Capital
  Assets Liabilities
• To find Assets the equation will be Assets
  Liabilities Capital
• To find Liabilities the equation will
  be Liabilities Assets Capital

4
Balance Sheet (Horizontal Format)
N. Marcano
Name of Organization
Balance Sheet
Name of Statement As at January 5, 2005
Date
ASSETS Financed by

Equipment 20 000 Capital at start
200 000 Stock 3 000 Bank 177 000
200 000
200 000
5
Balance Sheet (Vertical Format)
N. Marcano Name of
Organization
Balance Sheet
Name of Statement
As at January 5, 2005
Date ASSETS Equipment 20 000 Stock 3
000 Bank 177 000
200 000
Financed by
Capital
at start 200 000