1. ACCOUNTING FOR A BUSINESS
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, Date
ASSETS $ Financed by $
Equipment Capital at start
Stock
Bank

5. Balance Sheet (Vertical Format)
N. Marcano Name of Organization
Balance Sheet Name of Statement
As at January 5, Date
ASSETS $
Equipment
Stock
Bank
Financed by
Capital at start