Monthly Archives: January 2022

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Content Relationship to Double Entry Accounting A Quick Note on Debts The accounting equation formula and its elements Shareholders’ Equity Sample Accounting Equation Transactions The Accounting Equation: Assets = Liabilities + Equity This category includes the worth of any investments made in the company, whether by owners or shareholders. After all liabilities have been satisfied, the owner’s equity will equal everything left over from the assets. If a business has net income for the period, then this will increase its retained earnings for the period. This means that revenues exceeded expenses for the period, thus increasing retained earnings. Relationship to Double Entry Accounting Essentially, the representation equates all uses of capital to all sources of capital, where debt capital leads to liabilities and equity capital leads to shareholders’ equity. Represents a customer’s advanced payment for a product or service that has yet to be provided by the company. Since the […]