1. The Accounting Equation o The resources owned by a business are its assets. o The rights of creditors are the debts of the business and are called liabilities. o The rights of the owners are called owner’s equity. o The equation Assets = Liabilities + Owner’s Equity is called the accounting equation.

2. The resources owned by a business Assets = Liabilities + Owner’s Equity T HE A CCOUNTING E QUATION

3. Assets = Liabilities + Owner’s Equity T HE A CCOUNTING E QUATION The rights of creditors are the debts of the business

4. The rights of the owners Assets = Liabilities + Owner’s Equity T HE A CCOUNTING E QUATION

5. Business Transaction o A business transaction is an economic event or condition that directly changes an entity’s financial condition or its results of operations.

6. Types of Transactions Affecting Owner’s Equity Types of Transactions Affecting Owner’s Equity