Assets
Economic resources with potential to provide future economic benefits
Assets e.g.
Cash
Inventories
A/R
PP&E
Liabilities
Creditors claims
Liabilities e.g.
A/P
Debt
N/P
SE
Funds owners provided
amount of funds owners have provided either by buying shares or by reinvesting (retained) the net assets generated by earnings
SE e.g
Common stock
Retained earnings
The basic accounting equation
Assets = Liabilities + SE
Current items
Assets - to be turned into cash, sold or conumed within one year
Liabilities - obligations to be paid within one year
Noncurrent items
Assets - used for several years
Liabilities - sources of funds whose suppliers do not expect to receive payment within the next year
Current asset accounts
cash
A/R = accounts
Inventory
N/R = notes
I/R = interest
Typical non current asset accounts
Marketable securities
Advances to suppliers
Prepaid rent
Prepaid insurance
Typical current liability accounts
Advances to customers
I/P
Income taxes payable
Typical non current liability accounts
bonds payable
Mortgage payable
Differed income taxes
Typical SE accounts = contributed capital
common stock
Additional paid-In Capital
Preferred stock
retained earnings
Other comprehensive income
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