The Accounting

Equation
OBJECTIVES

•Understand the elements of the

accounting equation
•Use the accounting equation to solve
problems
Real life business transaction ???
So, what is accounting
equation?
ASSETS = LIABILITIES +
OWNER’S EQUITY
Asset…

• Are resources owned

by the business
Liabilities…

• Are obligations
by the business

• Simply…the debt
of the business
Owner’s Equity…

• The residual interest of

the owner of the business

• ELEMENTS
• Investment
• Withdrawal
• Revenue
• Expenses
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“
PRACTICE PROBLEM

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P. 61
Quiz!
Describe each transaction.
Date ASSETS LIABILITIES OWNER’S
EQUITY
Cash Supplies Equipment
Bal 60,000 7,500 300,000 75,000 292,500
1 150,000 150,000
2 (20,000) 20,000
3 (112,500) (112,500)
4 5,000 5,000
5 (15,000) (15,000)
6 (53,000) (53,000)
7 (8,000) (8,000)
 ASSIGNMENT
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