...Accounting Equation Paper ACC 300 University of Phoenix Accounting Equation Paper No matter how big or small a company is, the business will have some sort of financial transaction coming in or out that will affect the company’s financial standing. In any company, the accountant or accounting department plays a crucial role in ensuring the company succeeds. The main role of accounting is to analyze records and keep track of all financial transactions. The resources that make up a company’s assets, as well as the accounting equation, are liabilities and owner’s equity. At first, owner’s equity is affected by capitals such as issuing stocks. Once the business is up and running, income as well as expenses will be added to the balance sheets. Assets include everything the company owns, from the building to the package of paperclips. Liabilities are debts the company has, to other businesses or individuals. These debtors could include vendors, employees, or financial institutions that loaned money. Equity is also referred to as capital and consists of assets and any debts owed to the business from outside sources. In order to understand the accounting equation, the accounting department as well as leadership must understand how these relate to one another. The accounting equation is as follows: Assets = Liabilities + Owners/Stockholders Equity. Examples of assets include cash, account receivable, and equipment (Kimmel, 2011). The way that this accounting equation...
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...Accounting Equation ACC/300 October 6, 2014 Accounting Equation From the smallest sole proprietorship to the largest corporation, all transactions in a business setting will have an effect on a company’s monetary status. The monetary status of a business is defined by three things: liabilities, assets and owner’s equity. The liabilities are debts or obligations to other people and assets are property or funds owned by the company. The owner’s equity is the total assets of a company minus its total liabilities. The accounting equation: Assets = Liabilities + Owner’s Equity shows the association between the three types of accounts in the accounting world. The accounting equation differs slightly between a corporation and a sole proprietorship. The reason is because a sole proprietorship owns all the equity while a corporation shares the equity with stockholders. Thus, the accounting equation for a one-owner business is: Assets = Liabilities + Equity. The accounting equation for a corporation would be the same except the last part of the equation which would read as stockholder’s equity. Examples of assets include cash, account receivables, and equipment (Kimmel, Weygandt, & Keiso, 2010). From the accounting equation, the amount of assets must equal the combined amount of liabilities plus the equity. Examples of liabilities include notes payable, accounts payable, and salaries payable (Kimmel, Weygandt, & Keiso, 2010). Examples of owner’s or stockholder’s...
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...Accounting Equation It is necessary to understand the accounting equation to know and understand the components of a balance sheet. The accounting equation is simply stated assets – liabilities = Shareholder equity and is necessary to balance the books of a company. The accounting equation is best understood in the balance sheet. The balance sheet essentially shows how much money the company has, how much it owes, and what is left for the stockholders. There are many ways that the accounting equation relates to the components of the balance sheet which can be explained more in depth. Examples will also provide more in-depth understand of how the components of the accounting equation affect each other and how transactions affect the accounting equation. Essentially, a balance sheet is created when one subtracts everything that is owed from everything that is owned to come up with a net worth. Just as an individual would put this information together as a balance sheet to evaluate one’s credit worthiness, companies are required to put their balance sheets together several times a year for shareholders. This also allows investors to gauge the company’s finances, and is usually the first report to look at when determining the value of a company. The balance sheet has three main parts which are the assets, liabilities, and shareholder equity. Every balance sheet must balance, and relates to the accounting equation in the sense that the balance sheet shows the...
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...Accounting Equation Paper HH ACC/300 October 19, 2015 Douglas Hartman Accounting Equation Paper Whether the size of the organization is big or small, this organization must deal with financial statements; such as transactions coming in and transactions coming out that are going to impact the organization’s financial standing. In all the organizations, the accounting department plays a major role to ensure the organization’s succeed. The key role of the accounting department is to inspect records and track all the transactions that ate happening. Liabilities and Owner’s equity are the resources that are used to make the organization’s assets and accounting equation. Capitals influence owner’s equity; for example, issuing stocks. Once the business is up and running, income and also expenses will be added to the balance sheet (Tracy, 2015). Assets incorporate everything the organization maintains. There are two kinds of assets: the tangible assets such as property and equipment and intangible assets such as trademarks ("Asset", 2015). Liabilities are obligations the organization has, to different organizations or people. These account holders could incorporate merchants, workers, or financial foundations that lent cash. Equity is alluded to as capital and comprises of assets and any obligations owed to the business from external sources. To comprehend the accounting equation, the accounting division, and administration we must see how these identify with each other...
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...Individual Assignment - Accounting Equation Paper Dennis R Ware ACC/300 October 1, 2012 Kimberly McMillon Individual Assignment - Accounting Equation Paper From the largest corporation all the way down to the mom and pop store, every business transaction will have an effect on a company’s financial position. According to Investopedia.com, the financial position of a company is measured by the following three things: assets, liabilities, and owner’s equity. The assets are what the company owns. The liabilities are what the company owes to others. The owner’ equity is the difference between the assets and liabilities. The accounting equation offers a simple way to understand how the three amounts relate to each other. The accounting equation for a sole proprietorship is as follows: Assets = Liabilities + Equity. The accounting equation for a corporation is as follows: Assets = Liabilities + Stockholders’ Equity. Examples of assets include cash, account receivable, and equipment (Kimmel, 2011). From the accounting equation, you can that the amount of the assets must equal the combined amount of liabilities plus owner’s (or stockholders’) equity. Examples of liabilities include notes payable, accounts payable, and salaries payable (Kimmel, 2001). Examples of owner’s or stockholders’ equity include common stock and retained earnings. The balance sheet is also known as the statement of financial position. It reflects the accounting equation. The balance sheet reports...
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...Written Assignment Grading Form: Individual Assignment: Accounting Equation |Content and Organization |Percent Earned: |Comments: | |70 Percent | | | | | | | |All key elements of the assignment are covered in a substantive way. | | | |Write a 350-word essay describing the accounting equation. | | | | | | | |Include how the accounting equation relates to the components of the balance | | | |sheet, | | | | | | | |Provide examples that show how the components of the accounting equation affect| | | |each other and how transactions affect the accounting equation. | | ...
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...Accounting Equation Paper k Accounting Equation Paper Assets that are financed by borrowing money and assets that are bought with money of the company shareholder can be demonstrated in the accounting equation. In a company, assets are owned by the company. Liabilities are the debts and obligations of the company, also liabilities characterize claims of creditors on the assets of a company. Stockholders’ equity shows the entitlements of owners on the assets of the company. The equity is divided into two parts retained earnings and common stock. The balance sheet reports assets and claims to assets at one particular point in time. Claims to assets are subdivided into two categories and they are claims of owners and claims of creditors. The accounting equation has to stay balanced at all times (Kimmel, Weygandt, & Kieso, 2011, Chapter 1). A good example of this is if an individual asset goes up, there must be a corresponding asset that goes down, or an increase in a specific liability, or an increase in stockholders’ equity. Two or more items could be affected when an asset is increased. If a company were to buy a piece of gear costing $16,000 for example, they decide to pay $8,000 in cash and sign a note for the remaining $8,000. One asset (gear) goes up $16,000, another asset (cash) goes down $8,000, and a liability (notes payable) increases $8,000. As you can see the accounting equation in this example balances, the asset was worth $16,000, the liability, the notes...
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...Accounting Equation Paper Shannon Straight ACC/300 April 20, 2015 Kimberly McMillon Accounting Equation Paper “One type of accounting report is a balance sheet, which is based on the accounting equation: Assets = Liabilities + Owners’ Equity. The balance sheet — also called a statement of financial condition — is a “Where do we stand at the end of the period?” type of report. The header of a balance sheet lists the date that it was prepared (The Essentials of Accounting Basics).” The equation should always remain in balance for every accounting transaction. If there is an increased in an asset account, there has to be a corresponding decrease in another assets account or a corresponding increase in a liability or equity account. To make a balance sheet, we should list the assets and come up with a number. Then we need to list the liabilities and equity and come up with a number. If two numbers are equal, then our balance sheet will balance. It is the balance of one’s assets to the liabilities. Owners’ equity contains the owners capital accounts and retained earnings, and is increased by revenues, owners investments, and issuance of stock. It is decreased by expenses, drawings, dividends and treasury stock. If I have invested cash in a business, we increase assets and increase the owners, equity, we then invested cash and increase assets; the person who invested the cash increases owners’ equity. If I pay for the utilities used in the business, I should decrease assets...
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...Summary Paper Irene Chumo ACC/300- Principles of Accounting January 26, 2015 September Foster Media Summary Paper The media that i used was the video on financial statements, “financial statements are records that outline the financial activities of a business, an individual or any other entity. Financial statements are meant to present the financial information of the entity in question as clearly and concisely as possible for both the entity and for readers. Financial statements for businesses usually include: income statements, balance sheet, statements of retained earnings and cash flows, as well as other possible statements (Vestopedia, 2015). From the video we learnt in detail the meaning of accounting and purpose, it states that accounting is a standard practice for businesses to present financial statements that adhere to generally accepted accounting principles (GAAP), to maintain continuity of information and presentation across international borders. As well, financial statements are often audited by government agencies, accountants, firms, etc. to ensure accuracy and for tax, financing or investing purposes. Financial statements are integral to ensuring accurate and honest accounting for businesses and individuals alike. GAAP being the rule book of accounting, it lays down strict regulation for consistency purpose and the financial accounting standard board (FASB) updates GAAP as needed. The two types of accounting are the Certified Public Accounting (CPA)...
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...Assignment Overview Click Link Below To Buy: http://hwcampus.com/shop/acc201-module-1-case/ There are three main parts to this case that require you to prepare and submit a 3- to 5-page paper. Please make sure this paper is well organized and covers all of the items below. Part I Search the course background information, the Internet and/or the Cyber Library. Discuss the terms listed below. Your discussion should expand on the definition as given in the module background. Explain why these concepts are important to financial statements. •Generally Accepted Accounting Principles (US GAAP); •International Accounting Standards (IFRS); •Securities and Exchange Commission (SEC); •Annual report; and •10-K, 10-Q, and 8-K Part II Explain the basic formats of financial statements such as income statement, balance sheet, statement of cash flows, and statement for retained earnings. Part III 1.Everything in Accounting typically falls into one of three categories, as illustrated by the Accounting Equation. State the Accounting Equation: Assets = _______________ + _______________ 2.You will note that the Accounting Equation comprises 3 "categories," each of which can be broken down further into accounts. For each of the three main categories of the Accounting Equation, list 5 or more accounts with actual amounts that would typically be classified into each. For instance, Land & Equipment would typically be categorized as Assets. 3.To simplify your answers, complete...
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...Journal of Accounting Research Vol, 29 No, 1 Spring 1991 Printedin U.S.A. Earnings as an Explanatory Variable for Returns PETER D. EASTON* AND TREVOR S. HARRISf 1. Introduction In this paper we investigate whether the level of earnings divided by price at the beginning of the stock return period is relevant for evaluating earnings/returns associations.^ The primary model motivating this research relies on the idea that book value (owners' equity) and market value are both "stock" variables indicating the wealth of the firm's equity holders. The related "flow" variables (after adjusting for dividends) are, respectively, earnings divided by price at the beginning of the return period {A/P~i) and market returns. It then follows that earnings divided by beginning of period price should be associated with stock returns. Although models based on a relation between market value and book value are used occasionally in the accounting research literature (see, for example, Landsman [1986], Harris and Ohlson [1987], and Barth * Macquarie University and University of Chicago; tColumbia University. The paper is a revised version of working papers entitled "An Empirical Evaluation of Accounting Income Numbers: Further Evidence" and "Evidence of Accounting Earnings as an Index of Change in Value." The authors would like to acknowledge comments from workshop participants at the following universities; Arizona, Auckland, California at Berkeley, California at Los Angeles, Columbia,...
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...Analyzing Business Transactions LEARNING OBJECTIVES 1. 2. Record in equation form the financial effects of a business transaction. Define, identify, and understand the relationship between asset, liability, and owner’s equity accounts. Analyze the effects of business transactions on a firm’s assets, liabilities, and owner’s equity and record these effects in accounting equation form. Prepare an income statement. Prepare a statement of owner’s equity and a balance sheet. Define the accounting terms new to this chapter. LP2 Chapter NEW TERMS accounts payable accounts receivable assets balance sheet break even business transaction capital equity expense fair market value fundamental accounting equation income statement liabilities net income net loss on account owner’s equity revenue statement of owner’s equity withdrawals 3. 4. 5. 6. www.southwest.com Rollin King and Herb Kelleher had a simple notion when they got into the airline business: If you get your passengers to their destinations when they want to get there, on time, at the lowest possible fares, and make darn sure they have a good time doing it, people will fly your airline. What began as a small Texas airline has grown to become one of the largest airlines in America. Today, Southwest Airlines flies almost 100 million passengers a year to 63 cities all across the country. In an economy where airlines struggle to stay out of bankruptcy, Southwest has flourished. Other airlines have tried to imitate...
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...BSA310 Week 3 Supporting Activity With the topic of accounting and finance it is important for business owners to know and understand the value of properly accounting for their cash flow, assets, and liability. This is especially true for new business owners who are just getting started. Accounting is one of the most important functions of a business because if done right the company will do fine and grow, but if done wrong or poorly, then the company will be in a virtual tailspin that will send the company out of business or even into bankruptcy. With accounting being such an important entity there are many options for an owner to choose from when it comes to accounting. Most options nowadays are accounting software applications of some kind, either web-based or stand-alone. However, some small businesses are still doing hard copy paper accounting, which is much more difficult in this day in age. Owner’s Equity One of the first concepts a new owner must understand is how he can determine his owner’s equity. This is a pretty simple business equation that can be best explained to be like the hands of justice, where they always need to be balanced. What happens on one end needs to happen on the other end to stay balanced. The equation is simply assets=liability+owners equity. This equation tells the owner where the company stands. The assets are what the company physically owns like work trucks and how much product. Where the liability is how much the company owes to place...
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...Accounting Equation Paper Keegan Mueller ACC 300 University of Phoenix 2/9/2015 Brian Lichau The Accounting Equation The accounting equation consists of three different entities within an organization; assets, liabilities, and stockholders’/owner’s equity. With these three principles, a company can measure their financial position. The main purpose behind the accounting equation is to figure out what assets the company has. In doing so, they must take into account the liabilities and owner/stockholder equity. The equation is simple: Assets = Liabilities + Owner/Stockholder Equity. The equation is able to illustrate what the company owns versus what it owes. The difference will either be a positive or negative based on how much money the company is making. Broken down, the assets are the company’s resources (what the company owns), liabilities are a company’s obligations (what the company owes), and owner/stockholder equity illustrates the amount of money invested in the company by the owners along with the net income that has not been paid out through dividends yet. The balance sheet is what reports the company’s assets, liabilities, and owner/stockholder equity at any given time. Entries are made on the balance sheet that correlates with each category of the assets, liabilities, equity. Debits and credits are made based on whether money is coming in or going out; debits on the left and credits on the right. The balance sheet should show that the total amount...
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... | | |Financial Accounting Concepts and Principles | Copyright © 2010, 2009 by University of Phoenix. All rights reserved. Course Description This course covers the fundamentals of financial accounting as well as the identification, measurement, and reporting of the financial effects of economic events on the enterprise. Financial information is examined from the perspective of effective management decision making with special emphasis on the planning and controlling responsibilities of practicing managers. Policies Faculty and students/learners will be held responsible for understanding and adhering to all policies contained within the following two documents: • University policies: You must be logged into the student website to view this document. • Instructor policies: This document is posted in the Course Materials forum. University policies are subject to change. Be sure to read the policies at the beginning of each class. Policies may be slightly different depending on the modality in which you attend class. If you have recently changed modalities, read the policies governing your current class modality. Course Materials Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2008). Financial accounting (6th ed.). Hoboken, NJ: Wiley. All electronic materials are available on the student website....
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