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‘The Accounting Equation ‘he resources cone ya usiass ar eared a ts ase, Fr naw snes, nose assets enghaa rm bo posse sures + vests who buy ono inthe usin 1 Creators extend tears tote buses “Tee who cormbita ast to atusines have od climsen hase asst. Since Sota asses ofthe busines rs aqualto he sum of he arstsconmiuted by Ineestrs andthe assets cenubtedby cedars, thofoleng oat hols and iBretnedts ants aeeouneing equation Assets = Libis + Owners" Equity Resouces Clamson the Resouces Int, coer eau ected by capt conbusons such 35 issuance of ‘tos Once busines opera ots commence Bee ll be ncame venues mus "perce td gare rings loses} aneeaps sdanorel canta combo sid ‘ethane 128 as vidos arte end ol arepoting pened ese tems va Irpoctte ones equty aleve esate © Lisblities + Owners’ Equty Exponses + Gains + Conttutiors ‘iberanels “These addtiond items une cents! equity are rackadin temporary aunts i SNoand ft aecouringpaiodarnich iro toy are cesedo owners ely ‘he acourtng equaten ols atl bes ove of e siness. ena aroacionectus,te oa ascets oe tuanens may hang, Dut Me eave Temannin Baie The accartng eqlaien carves asthe bans re Galanee Sheet os haateain ie fokwina exam ‘The Accounting Equation - A Practical Example Tobator undertandthe acceutog equation consider he flowing expla. Mike Pagser ascents open ancy raparsnep ogetstanad ne rere sons oh nose purchases ann slinartn te pane, ap epane he cheer business Wie sean tna manaseiona tat aecuned durng ne set ment ste Transsetion Sep | Comet cortbtes $7800 in cashtocaptaze he business, ‘Sep Purtnased $2800 nike parts on arcout, payable in 30 days. Sep 15. Paid frstmontis shop rent of $1000, Sep 17 Repaired ies fr $1100, alec 400 cashed costes forthe ‘poo baence Sep 18 $275 ibe pane wore. used Sep 25 Callcted $425trem customer accounts, Sep 25. Paid $500 sues for pas purchased ater in he ment “hese ransactns ecto ocourong eeuaton as shoe lon = Lisbites + owner's Eculy on Paya * ‘Capa * pene si96 em) = om septs os = 2, sw 2 w= oat eu cu ee ee ee ee ee) Note met toroach dots inte bors example sum of erie under he “Assets heacing's exalt fe cum ef ents under tata ibee + Ormar's Eaaty feadng.nivostttheve casos fe Bapeastenafeciobcth sides cle acouring ‘quaton Homevat neta hal he Sep 25 barcacbenaflecodcr be asset ado ah ifeoasein cash and en oqua but cppeatedectoaso n accouts rocoto ‘Atte end of te mon of September, te netincome revenues minus expences) ‘dosed capt and hs bance shes or tn busess would appeals abit = Gamer's Eau “he bie pas are considered be invert nich appeas as an asset on the balance hoot Te owre’s oat i Modedaccotanato he dlrence tree, Favonues and expenses iigcase, he difrence Is alos cf B17, setheoroars ‘cules deceased fom $7200 ate begin of heron to $7305 ate ond eithemont Debts ane Crests “he above aime tustes how the accounting equation remain in balance for ach ansadion Nets hetnegabve arouts vote potiayed as negabv uté=rs. prochce, nogabe numbers ae neturedn double sy boolspng etm the FResrang of eochUareacicn modo a debis aniciadis nto appeerto

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