1. The Accounting Equation n Property: anything of value that is owned –cash and supplies to conduct daily business –can be used to acquire other assets (supplies) or to operate business n Financial Claims : rights or claims to property n Property = Financial Claims (who owns it?)

2. The Accounting Equation n Property = Assets: anything of value that is owned –cash and supplies to conduct daily business –can be used to acquire other assets (supplies) or to operate business n Financial Claims = Equities: financial rights or claims to the assets of a business n Assets = Equities

3. The Accounting Equation n Assets: anything of value that is owned –cash and supplies to conduct daily business –can be used to acquire other assets (supplies) or to operate business n Equities: financial rights or claims to the assets of a business n Assets = Equities

4. The Accounting Equation n Assets = Equities $600 Assets$600 Equities

5. The Accounting Equation n Assets = Equities $600 Assets$600 Equities

6. The Accounting Equation n Assets = Equities $100 Assets $60 Equities$40 Equities

7. The Accounting Equation 2 Types of Equities: n Liabilities: amount owed by a business –Equity of those to whom money is owed. n Owner’s equity - amount remaining after value of all liabilities is subtracted from value of all assets –Equity of the owner

8. The Accounting Equation n Assets = Equities $100 Assets $60 Owner’s Equity $40 Liabilities

9. The Accounting Equation n Assets = Equities $100 Assets $60 Owner’s Equity$40 Liabilities $100 Assets = $40 Liabilities + $60 Owner’s Equity

10. The Accounting Equation: n Assets = Liabilities + Owner’s Equity (OE) I Owe You Billing Assets - Liabilities = Owner’s Equity (OE)

11. THE ACCOUNTING EQUATION n The Equation must ALWAYS be in balance!!! Lesson 1-1, page 7

12. T ERMS REVIEW accounting accounting system accounting records service business proprietorship Lesson 1-1, page 8 asset equities liability owner’s equity accounting equation

13. 1-1 WORK TOGETHER, p.8 3,0008,000 10,0006,000 63,00035,000 70,00022,000 50,00058,000 17,5002,250 40,25014,250 100,00023,456 10,00012,000 ASSETS = LIABILITIES + OWNER’S EQUITY

14. 1-1 WORK TOGETHER, p.8 11,0003,0008,000 10,0004,0006,000 63,00035,00028,000 70,00022,00048,000 108,00050,00058,000 17,5002,25015,250 40,25026,00014,250 100,00023,45676,544 22,00010,00012,000 ASSETS = LIABILITIES + OWNER’S EQUITY

15. 1-1 WORK TOGETHER, p.8 23,00013,000 70,00030,000 48,00025,000 55,00010,500 412,000618,000 5,5001,250 64,00038,000 88,00029,000 90,000 45,750 ASSETS = LIABILITIES + OWNER’S EQUITY

16. 1-1 WORK TOGETHER, p.8 23,00010,00013,000 100,00070,00030,000 48,00025,00023,000 55,00044,50010,500 1,030,000412,000618,000 5,5001,2504,250 64,00026,00038,000 117,00088,00029,000 90,000 45,750 ASSETS = LIABILITIES + OWNER’S EQUITY