1. ACCOUNTING INTRO

2. THE ACCOUNTING EQUATION
 Assets = Liabilities + Owner’s Equity
 Assets – anything of value a business owns
 Cash, equipment, buildings
 Accounts Receivable – amount your customers
owe you

3. LIABILITIES & OWNER’S EQUITY
 Debts of the business
 Most common is Accounts Payable
 What your company owes to creditors
 The total amount of assets minus liabilities gives
you the net worth of the business or owner’s equity.

4. EXAMPLE
 Jenny has a store with assets of $64,000
 Jenny has total liabilities of $21,000
 Jenny’s equity in the business is $43,000
 The net worth of Jenny’s business is $43,000
 Assets ($64,000) = Liabilities ($21,000) + Owner’s
Equity ($43,000)

5. DOUBLE ENTRY ACCOUNTING
 Debits are on the left
 Credits are on the right
 For assets/expense accounts
 Debits increase the balance
 Credits decrease the balance
 For liability and revenue accounts
 Debits decrease the balance
 Credits increase the balance