1. Lesson 1-1 The Accounting Equation
8/3/2018
LESSON 1-1
The Accounting Equation

2. THE ACCOUNTING EQUATION
Lesson 1-1
8/3/2018
THE ACCOUNTING EQUATION
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LESSON 1-1

3. TERMS REVIEW Liability – an amount owed by a business
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Liability – an amount owed by a business
owner’s equity – the amount remaining after the value of all liabilities is subtracted from the value of all assets
accounting equation – an equation showing the relationship among assets, liabilities, and owner’s equity
Ethics – the principles of right and wrong that guide an individual in making g decisions
Accounting - planning, recording, analyzing, and interpreting financial information
accounting system – a planned process for providing financial information that will be useful to management
Equities – financial rights to the assets of a business
LESSON 1-1

4. accounting records – organized summaries of a business’s financial activities
financial statements – financial reports that summarize the financial condition and operations of a business
service business – a business that performs an activity for a fee
Proprietorship – a business owned by one person
Asset – anything of value that is owned
business ethics – the use of ethics in making business decisions
LESSON 1-1

5. LESSON 1-2 How Business Activities Change the Accounting Equation
8/3/2018
LESSON 1-2
How Business Activities Change the Accounting Equation

6. RECEIVING CASH
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Transaction 1 August 1. Received cash from owner as an investment, $5,
LESSON 1-2

7. PAYING CASH Transaction 2 August 3. Paid cash for supplies, $275.00.
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Transaction 2 August 3. Paid cash for supplies, $
Transaction 3 August 4. Paid cash for insurance, $1,
LESSON 1-2

8. TRANSACTIONS ON ACCOUNT
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Transaction 4 August 7. Bought supplies on account from Supply Depot, $
Transaction 5 August 11. Paid cash on account to Supply Depot, $
LESSON 1-2

9. TERMS REVIEW
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Transaction – a business activity that changes assets, liabilities or owner’s equity
Account – a record summarizing all the information pertaining to a single item in the accounting equation
account title – the name given to an account
account balance – the amount in an account
Capital – the account used to summarize the owner’s equity in an business
LESSON 1-2