Extended Accounting Equation - Revenue, Expenses, Dividends

Front

What are assets in accounting?

Back

Things that one owns

Front

What are liabilities in accounting?

Back

Things that one owes on

Front

What is owner's equity in accounting?

Back

The amount of money an owner has invested into the company

Front

What is the fundamental basis of the double-entry bookkeeping system?

Back

Debits equal credits

Front

What is the purpose of the accounting equation?

Back

To evaluate the company's financial health, to prepare a balance sheet, and to ensure the books are balanced.

Front

If a coffee shop sells 800 cups of coffee for $1.75 each, what is their revenue?

Back

$1,400

Front

What is the extended accounting equation?

Back

Assets = Liabilities + (Revenue - (Expenses + Dividends))

Front

What is the purpose of a balance sheet?

Back

To evaluate the company's financial health

Front

If a coffee shop owner has $70,000 in assets, $15,000 in liabilities, $8,000 in expenses, and paid $3,300 in dividends, what is their revenue?

Back

$66,300

Front

What is the net effect of equal and opposite entries in double-entry bookkeeping?

Back

Balance