Accounting “Stuff“ and “Claims Against the Stuff”

StuffClaims Against the Stuff Loans Owner Contributions

Rules The “Stuff” of your business must be matched by the “Claims Against the Stuff” Every transaction must be neutral….the “Stuff” must equal the “Claims Against the Stuff” Examples – If I add “stuff” to the business I must add a “claim against the stuff” OR I must decrease other stuff – If I add a “claim against the stuff” I must add some “stuff” to the business OR I must decrease other “claims against the stuff”

Stuff = Assets Claims Against the Stuff = Liabilities Owner Equity Debits Increase in stuff is a debit Decrease in stuff is a credit Credits Increase in claims against stuff is a credit Decrease in clams against stuff is a debit

Accounting Equation Assets = Liabilities + Owner’s Equity

Transactions Chas puts $5 into the business Chas borrows $5 from mom Chas buys lemons and sugar for $6.00 Chas makes the lemonade Chas sells 25 glasses of lemonade at $1.00 a glass. Chas pays back mom Chas withdraws his profits

StuffClaims Against the Stuff Chas’ claim Other people claims TOTAL