Accounting Fundamentals

Question	Answer
Income Statement	Revenues Expenses Profit or loss
Balance Sheet	Assets Liabilities Equity
Statement of Cash Flows	Operating Investing Financing
Balance Sheet Equation	Assets = Liabilities + Equity
Assets	What they own: Inventory, equipment, property Future economic benefit
Liabilities	What they owe: Long-term loans, accounts payable Amounts owed to vendors, suppliers, customers, and creditors
Equity	What is over: Shareholders equity Residual value
Equity Increases	Equity goes up when issuing stock, generating revenues
Equity Decreases	Equity goes down when increasing expenses, net losses, dividend
Balance Sheet must alway	Balance
Balance sheet uses a system called	Double-entry accounting
Asset Accounts	Cash Accounts Receivable Prepaid Insurance Inventory Capital Assets: Vehicles Equipment Buildings Land
Liabilities Accounts	Accounts payable Salaries payable Unearned revenue Notes payable
Liabilities Accounts	Accounts payable Salaries payable Unearned revenue Notes payable
Equity CR and DR	Revenue--CR Share Capital--CR Expenses--DR Dividends--DR
Issuing Shares for 100,000	Current Assets: Cash goes up 100,000 (DR) Liabilities and Shareholder's Equity: Shareholder's Equity:Common Stock goes up 100,000 (CR)
Issuing Shares Example pic	Image: Issuing Shares (binary/octet-stream)
Taking out a 4 year bank loan	Assets: Current Assets:Cash goes up 50,000 (DR) to equal 150,000 (100,000+50,000) Liabilities & Shareholder's Equity: Non-Current liabliities:Loan payable up 50,000 (CR)
4 year bank loan example	Image: 4 Year Bank Loan (binary/octet-stream)

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Accounting Fundamentals

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	Created by Leslie Thurman about 1 year ago