Accounting in Action

Answer

Assets
The business users its assets in carrying out such activities as production and sales. The common characteristic possessed by all assets is the capacity to provide future services or benefits. Assets are showed on a company's balance sheet, and they are increasing the value of a firm or benefit the firm's operations.

Liabilities
Liabilities are claims against assets that is, existing debts and obligations

Owner's Equity
The ownership claim on total assets is owner's equity. It is equal to total assets minus total liabilities.

 

Items affected Owner's equity.
There are two items effect owners equity
  1. Revenue: Revenues are the gross increase in owner's equity resulting from business activities entered into for the purpose of earning income.
  2. Expenses: Expenses are the cost of assets consumed or services used in the process of earning revenue. Expenses decreased the owner's equity that result from operating the business.

Problems: Accounting in Action

Problem-1: Accounting in Action

On April 1, Julie Spengel established Spengel's Travel Agency. The following transactions were completed during the month: Invested $15,000 cash to start the agency Paid $600 cash for April office...

Problem-2: Accounting in Action

Judi Salem opened a law office on July 1, 2018. On July 31, the balance sheet showed Cash $5,000, Account Receivable $1,500, Supplies $500, Equipment $6,000, Accounts Payable $4,200 and...

Problem-3: Accounting in Action

On June 1, Cindy Godfrey started Divine Designs Co., a company that provides cash opportunities by investing $12000 cash in the business. Following are the assets and liabilities of the...

Problem-4: Accounting in Action

Trixie Maye started her own consulting firm, Matrix Consulting, on May 1, 2018. The following transactions occurred during the month of May Trixie invested $7,000 cash in the business. Paid...

Problem-5: Accounting in Action

Financial statement information about four different companies is as follows: Instructions Determine the missing accounts. Prepare the owner's equity statement for Alpha company

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