what is the accounting equation course hero quiz 8

What are the 8 accounting equations every business should know?

Pts question 8 the accounting equation is expressed. This preview shows page 6 - 9 out of 12 pages. 2.5 / 2.5 pts Question 8 The accounting equation is expressed as ________. Assets + Liabilities = Owner's Equity Assets - Noncurrent Assets = Liabilities Assets = Liabilities + Investments by Owners Assets = Liabilities + Owner's Equity.

What are the three categories of accounts in accounting equation?

The accounting equation is also known as the balance sheet equation or the basic accounting equation. A company 's total assets are equal to the sum of its liabilities plus its shareholders ' equity , according to the accounting equation .

What is the accounting equation for assets liabilities and equity?

12,482 recent views. Students are introduced to the field of financial accounting through defining the foundational activities, tools, and users of financial accounting. Students learn to use the accounting equation and are introduced to the four major financial statements. Additional topics include ethical considerations, recording business ...

What is the accounting equation and why is it important?

Jan 26, 2014 · The accounting equation, written as Assets = Liabilities + Owner's Equity, shows the relationship between the three major types of accounts found in the accounting world. When used correctly, it is...

What is the first step in the accounting cycle?

In this module we introduce the first step in the accounting cycle: “Analyze Transactions”. By the end of this module you will be able to analyze and record service business transactions within the fundamental accounting equation. First, we will walk through examples of recording business transitions in the video lesson. Then you will complete an activity to practice recording transactions on your own.

What are the topics covered in financial accounting?

Additional topics include ethical considerations, recording business transactions, and the application of credit/debit rules.

Can you see lectures in audit mode?

Access to lectures and assignments depends on your type of enrollment. If you take a course in audit mode, you will be able to see most course materials for free. To access graded assignments and to earn a Certificate, you will need to purchase the Certificate experience, during or after your audit.

Does Coursera give financial aid?

Yes, Coursera provides financial aid to learners who cannot afford the fee. Apply for it by clicking on the Financial Aid link beneath the "Enroll" button on the left. You'll be prompted to complete an application and will be notified if you are approved.

What are the parts of accounting equation?

Understanding the Parts. In order to understand the accounting equation, you have to understand its three parts. First are the assets. Assets are anything that a company owns. Good examples of assets are cash, land, buildings, equipment, and supplies.

What is the equation for Ed's accounts?

Balance is the key when it comes to accounting. The accounting equation, which is written as Assets = Liabilities + Owner's Equity, shows the relationship between the three main categories of accounts and helps to maintain balance in company's accounts as well.

What are the three categories of accounts?

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. Liabilities are what a company owes. Owner's equity is how much money that a company owner has personally invested in the business.

How to know if a company's accounts are balanced?

To see if everything is balanced, the totals are simply plugged in to the accounting equation.

How much does Ed borrow from the bank to build the store?

He borrows $25,000 from the bank to build the store. Once built, the store has a value of $40,000. Ed also has to hire an employee to help him work the store. The employee's salary is $15,000 a year. In order to make the cheese, ice cream, and sweet cream that he plans on selling in the store, Ed purchases equipment.

What are the accounting formulas used for?

There are a variety of accounting formulas for businesses that can be used for a variety of purposes, such as producing a statement of cash flows, reviewing inventory turnover, and analyzing total sales. Below are some of the most common accounting equations businesses should know. 1.

Which side of the equation must equal the sum of liabilities and equity?

The dollar amount of assets on the left side of the equation must equal the sum of liabilities and equity on the right side of the equation. 2. Net income equation. As a business owner, you need to know whether your company is profitable or not, especially if you’re looking for investors.

What is double entry accounting?

To perform double-entry accounting, you use the accounting equation, also called the balance sheet formula, to ensure your company’s assets equal the sum of your company’s liabilities and shareholder’s equity. The accounting balance sheet formula makes sure your balance sheet stays balanced.

What is the cash ratio equation?

Most businesses take on some form of debt to operate, such as business loans, mortgages, and pension obligations. The cash ratio equation measures your company’s liquidity, or ability to pay off all of these liabilities at once if you were required to do so.

What is shareholder equity?

Shareholder’s equity, also called owner’s equity, is the difference between assets and liabilities and can be looked at as the true value of your company. Shareholder’s equity can take the form of common stock, retained earnings, and additional paid-in capital.

What is balance sheet?

A balance sheet is a financial document that shows what a company owns and owes, along with the equity that shareholders have in a company. The balance sheet is used to provide a picture of how a company is performing at a specific moment in time.

What is accrual basis accounting?

Accrual basis accounting method: Accounting method in which a company recognizes expenses and revenues at the time of a sale. Cash basis accounting method: Accounting method in which a company recognizes expenses and revenues when a payment is received.

What is accounting transaction?

An accounting transaction is a business activity or event that causes a measurable change in the accounting equation. An exchange of cash for merchandise is a transaction. Merely placing an order for goods is not a recordable transaction because no exchange has taken place. In the coming sections, you will learn more about the different kinds ...

Why is it important to analyze a transaction before recording it?

Since each transaction affecting a business entity must be recorded in the accounting records based on a detailed account (remember, file folders and the chart of accounts from the previous section), analyzing a transaction before actually recording it is an important part of financial accounting.

Is 100,000 equity ownership?

100,000. In a sole-proprietorship, equity is actually Owner’s Equity. If the business in question is a corporation, equity will be held by stockholders, which uses stockholder’s equity but the basic equation is the same:

How much did Chopper make in 2016?

On September 1, 2016, Chopper, Inc. reported Retained Earnings of $272,000. During the month of September, Chopper generated revenues of $40,000, incurred expenses of $24,000, purchased equipment for $10,000 and paid dividends of $12,000.

How much is B and C Star's allowance for doubtful accounts?

Both B and C. Star's Allowance for Doubtful Accounts had a credit balance of $37,800 on January 1, 2019. During 2019, the company wrote off $30,600 of Accounts Receivable as uncollectible. The company prepared the following summary schedule from an aging of accounts receivable outstanding on December 31, 2019:

What is the communication activity in accounting?

The communication activity of the accounting process provides useful financial reports to users and provides various techniques, such as formatting of reports, charts and graphs, and ratios, to users to help them interpret the content of the reports.

What is the purpose of a balance sheet?

The purpose of a balance sheet is to present a firm's assets, liabilities, and stockholders' equity on a given date. The purpose of a statement of cash flows is to report information about cash inflows and cash outflows during a period of time. The cash flows are grouped into three categories: operating activities, investing activities, ...

What is trial balance in accounting?

The trial balance is a listing of all accounts from, the general ledger with their respective debit or credit balance.

Why is a trial balance prepared?

It is prepared at the end of a period to ensure that the sum of debit balances equals the sum of credit balances. This procedure may reveal the existence of certain errors. It is also useful in preparing financial statements. Explain how it is possible for a trial balance to be in balance but still be in error.

What is the difference between assets and liabilities?

Assets are the economic resources of an enterprise that can be expressed in monetary terms. Liabilities are the obligations , or debts , that an enterprise must pay in cash or services at some time in the future because of past transactions or events.

What is stockholder equity?

Answer: D. Stockholders' equity refers to the ownership (stockholder) claims on the assets of the business. Stockholders' equity represents a residual claim on the business's assets, that is, it is a claim on the assets of a business that remain after all the liabilities to creditors have been satisfied (net assets).

What is a labor union?

Answer: C. A corporation is a form of business organization that exists as a legal entity, subject to taxes, that issues shares of stock to its owners or shareholders in exchange for cash or other resources. (1.4) The communication activity of the accounting process must: