Ad
related to: accounting for equity investment assets and liabilities
Search results
Results from the WOW.Com Content Network
To balance your books, the accounting equation says assets should always equal liabilities plus equity. But if you need a business loan or line of credit, understanding the relationship between ...
Assets Liabilities Equity Explanation 1 + 6,000 + 6,000 Issuing capital stock for cash or other assets 2 + 10,000 + 10,000 Buying assets by borrowing money (taking a loan from a bank or simply buying on credit) 3 − 900 − 900 Selling assets for cash to pay off liabilities: both assets and liabilities are reduced 4 + 1,000 + 400 + 600
The accounting equation relates assets, liabilities, and owner's equity: Assets = Liabilities + Owner's Equity. The accounting equation is the mathematical structure of the balance sheet. Probably the most accepted accounting definition of liability is the one used by the International Accounting Standards Board (IASB). The following is a ...
The difference between the assets and the liabilities is known as equity or the net assets or the net worth or capital of the company and according to the accounting equation, net worth must equal assets minus liabilities. [4] Another way to look at the balance sheet equation is that total assets equals liabilities plus owner's equity.
The fundamental accounting equation requires that the total of liabilities and equity is equal to the total of all assets at the close of each accounting period. To satisfy this requirement, all events that affect total assets and total liabilities unequally must eventually be reported as changes in equity.
The accounting equation (Assets = Liabilities + Owners' Equity) and financial statements are the main topics of financial accounting. The trial balance , which is usually prepared using the double-entry accounting system , forms the basis for preparing the financial statements.
Statement of Financial Accounting Standards No. 115, Accounting for Certain Investments in Debt and Equity Securities, commonly known as "FAS 115", is an accounting standard issued during May 1993 by the Financial Accounting Standards Board (FASB), which became effective for entities with fiscal years beginning after December 15, 1993. [8] [9]
Assets = Liabilities + Equity (in financial accounting, the term equity, not Capital, is used) Liabilities = Assets − Equity Equity = Assets − Liabilities. Assets are reported on the balance sheet. [11] On the balance sheet, additional sub-classifications are generally required by generally accepted accounting principles (GAAP), which vary ...
Ad
related to: accounting for equity investment assets and liabilities