Professional Documents
Culture Documents
Example
Consider the following business activities or events
of a typical firm:
- the firm owned assets of $100,000
- the firm owed creditors $80,000 (i.e. liabilities)
- the firm owed the owner $20,000 ( i.e. net worth)
Practical Test
1. Given any two known elements of the
accounting equation, the third can be logically
computed. Determine the missing amount in
each of the accounting equations below.
Assets = Liabilities + Owners' Equity
1) Cash
2) Accounts payable
3) Owners' Investment
4) Accounts receivable
5) Land