The assets, liabilities and equity relation, are known as the accounting equation. Assets are the resources of company and that increase as business expand whereas liabilities are the burden on company that has to pay in future; Equity means the owner claim on assets. An accounting equation represent the assets of the company are equal to the liabilities and equity of the company.
In can be represented as follow,
Net Income:
Total earning of the company is called net income of the company. When the total expense deducted from the total revenue than the resultant is net income or ne loss.Net profit of the company is also called net profit. The investor can take a decision on the basis of net income of the company. If net income is more the investor attract to the company.
To identify: The effect of transactions on the accounting equation.
Want to see the full answer?
Check out a sample textbook solutionChapter 1 Solutions
FINANCIAL ACCT.FUND.(LOOSELEAF)
- You can find below a list of accounts and their amounts for DigitalCom Co. The accounts are presented in alphabetical order. Prepare a trial balance for December 31, 2019 and keep the numbers on a side paper (you might need them for answering other questions also). Then answer the question below, based on your results. Question: What is the amount of Retained Earnings? Accounts Payable Accounts Receivable Advertising expense Building Capital stock Cash Dividends Land Notes Payable 5,000 3,000 400 18,000 14,100 6,500 1,600 26,000 15,000 31,000 Revenue Retained Earnings Supplies Utilities expense Wage expense Wages Payable ? 700 900 13,250 3,050arrow_forwardWhat Do You Think? You work as an accounting clerk. You have received the following information supplied by a client, S. Winston, from the clients bank statement, the clients tax returns, and a variety of other July documents. The client wants you to prepare an income statement, a statement of owners equity, and a balance sheet for the month of July for Winston Company.arrow_forwardRequired: 1. Prepare a journal entry for each transaction. Use the account titles in the Apple balance sheet and show answers in millions of dollars. 2. Create T-accounts for each balance sheet account and include the September 28, 2019, balances; create a new account, Dividends Payable, with a $0 beginning balance. Post each journal entry to the appropriate T-accounts. 3. Prepare a trial balance at September 26, 2020. 4. Prepare a classified balance sheet for Apple at September 26, 2020, based on these transactions. Include a good heading. 5. Compute Apple’s current ratio on September 26, 2020. Round your answer to two decimal places. What does this suggest about the company?arrow_forward
- Please assist with the Balance Sheet, show workings and explain how we get common stock and retained earnings figures. You work as a freelance accounting professional and have been recently engaged by the auditors of Life-Positive Inc. for an assignment. In examining the company’s records, you have extracted the following information. 1. Prepare a balance sheet for 2021 and 2022 for the company, clearly showing information about each line item.arrow_forwardINSTRUCTIONS: From the following data taken from the books Dynamite Consultants, a service business owned and managed by Mr. Jimin Park and from other personal records, you are required to prepare a properly classified balance sheet using account form for the business as of August 31, 2020arrow_forwardThe following are the assets and liabilities of Mimi Mac Realty Company, as of July 31, 2021. Also included are revenue, expense, and selected stockholders' equity figures for the year ended on that date (amounts in millions): E (Click the icon to view the account balances.) (Click the icon to view the balance sheet.) Read the requirements. Requirement 1. Prepare the income statement of Mimi Mac Realty Company for the year ended July 31, 2021. (Enter all amounts in millions. If an input field is not used in the income statement leave the field empty; do not select a label or enter a zero.) - X (millions) Reference Revenue: Mimi Mac Realty Company Expenses: Balance Sheet July 31, 2021 (Millions) Assets Liabilities Cash $ 57.7 Current liabilities $ 2.5 102.1 Receivables 0.7 Long-term liabilities Net income (loss) Investment assets 76.1 Total liabilities 104.6 Property and equipment, net 1.9 10.2 Other assets Stockholders' Equity Requirements Common stock 38.8 3.2 Retained earnings 42.0…arrow_forward
- Swift Company is a merchandising business organized in 2020. It is located in J. Hernandez Avenue, Naga City, with telephone number 1989-1213, and website tswiftmerchandising.com You were asked by the owner, Ms. T. Swift, to create a simple computerized accounting system for her business which they will use for records keeping, preparation of financial statements, and as substantiation for regulatory requirements. The December 31, 2021 post-closing trial balance for the Swift Company follows: Swift Company Post-Closing Trial Balance December 31, 2021 110 Cash ₱ 240,000 120 Accounts Receivable 210,000 130 Merchandise Inventory 730,000 140 Prepaid Rent 90,000 150 Office Supplies 160,000 160 Office Equipment 1,000,000 165 Accumulated Depreciation ₱…arrow_forwardRequirements: A. Prepare the journal entries for the October Transactions on journal sheets. Use the following accounts: Cash; Accounts Receivable; Office Supplies; Office Equipment: Accounts Payable; Ruiz, Capital; Ruiz, Drawings; Accounting Service Revenues; Salaries Expense; Rent Expense B. Use separate journal sheets for your answers. Rerey Ruiz had just opened his business for Accounting Services. During the month of October 2020, the following are his transactions: Oct. 01 Rerey Ruiz obtained the funds to start the business by withdrawing P650,000 from his personal savings and deposited the money in the name of the firm, Ruiz Accounting Services. 03 Ruiz bought a computer, a copy machine, a fax machine, calculators and other necessary equipment from M. Mercado, Inc. at a cost of P100,000. M. Mercado Inc. on account. 05 Ruiz placed an order for various supplies that had a total cost P20,000. The entity that sold the items, Cavite Supplies, Inc. requires cash…arrow_forwardAs an accountant, your new client Michael Sue's he's assistance in setting up his books for his business. To do this successfully, you start by showing him how you perform a transaction analysis based on the accounting equation assets equals liabilities plus owners equity. You explain to Michael how to show increases and decreases in assets liabilities and owners equity accounts using that analysis template. To help Michael understand the transaction analysis you reconcile each side of the equation by balancing out each column at the end of the transaction. complete by using the accounts cash, accounts receivable, supplies, equipment, accounts payable, notes payable, Suze capital, Suze drawing, service revenue, rent expense, salary expense, utilities expense, and advertising expense. Please record the transactions listed in the image.arrow_forward
- Identify whether the following group of people belongs to internal or external users ofannual reports for a company. Eexplain their need for financial information.a. Johari, investment banker of CIMB Investment Bank.b. Daisy Ong, purchasing manager of the company. c. Happy Berhad, supplier of the company. d. Great Sdn Bhd, regular customer of the company.e. Amy, officer from Inland Revenue Board.arrow_forwardUse T-accounts to record all business transactions: The accounts and transactions of Conner McAllister, Counselor and Attorney at Law, follow. Instructions Analyze the transactions a - c (typed here) and d - s (in the image). Record each in the appropriate T accounts. Use plus and minus signs in front of the amounts to show the increases and decreases. Indentify each entry in the T accounts by writing the letter of the transaction next to the entry. Assets Cash Accounts Receivable Office Furniture Office Equipment Automobile Liabilities Accounts Payable Owner's Equity Conner McAllister, Capital Conner McAllister, Drawing Revenue Fees Income Expenses Automobile Expense Rent Expense Utilities Expense Salaries Expense Telephone Expense a. Conner McAllister invested $140,000 in cash to start the business. b. Paid $7,800 for the current month's rent c. Bought a used automobile for the firm for $38,500 in cash d. - s. in the image All of the transactions (typed a. - c. and…arrow_forwardThe following are the assets and liabilities of Mary Burke Realty Company, as of August 31, 2021. Also included are revenue, expense, and selected stockholders' equity figures for the year ended on that date (amounts in millions): (Click the icon to view the account balances.) Read the requirement. the st part complete the assets section of the Dalance sheet in une second pan complete de aves and sucker quay section of the Dance sheet. Enter amounts in millions to one decimal place, XX. If an input field is not used in the balance sheet, leave the field empty; do not select a label or enter a zero.) (Amounts in millions) Current assets: Cash Receivables Assets Total current assets Investment assets (long-term) Property and equipment, net i Other assets (long-term) Total assets Mary Burke Realty Company Balance Sheet August 31, 2021 57.6 Current liabilities i 0.3 Long-term liabilities 57.9 Total liabilities Liabilities Stockholders' Equity 77.9 Common stock 1.7 Retained earnings 10.3 $…arrow_forward
- College Accounting (Book Only): A Career ApproachAccountingISBN:9781337280570Author:Scott, Cathy J.Publisher:South-Western College PubAuditing: A Risk Based-Approach (MindTap Course L...AccountingISBN:9781337619455Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:Cengage Learning