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What is the foundation of accounting?

Back

The foundation of accounting is represented as Assets = Liabilities + Owner's Equity.

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How is the accounting equation represented?

Back

Assets = Liabilities + Owner's Equity.

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Liabilities

Back

Debts or obligations a business owes to others, such as loans or accounts payable.

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Assets

Back

Resources owned by a business that have value, like cash, inventory, and equipment.

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Owner's Equity

Back

The owner's interest in the business after deducting liabilities from assets.

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Owner's Capital Account

Back

An account that represents the owner's investment in the business.

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Owner's Drawing Account

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An account that tracks withdrawals made by the owner for personal use.

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Sale on Account

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A sale where payment is due later and recorded as accounts receivable.

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Purchase on Account

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A purchase made with a promise to pay later, recorded as accounts payable.

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Asset Debit

Back

An entry that increases an asset account. Like cash received.