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    Assets Liabilities + Equity (A L+E) Assets

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    Wawex Davis
    The accounting equation states that assets equal liabilities plus equity. Assets are controlled, result from past events, and provide future economic benefits. Liabilities represent present obligations resulting from past events that require giving up resources. Equity is calculated as assets minus liabilities and represents net assets or net worth. The expanded accounting equation includes income and expenses, with income increasing equity through inflows or decreases in liabilities and expenses decreasing equity through outflows or increases in liabilities.

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    Assets Liabilities + Equity (A L+E) Assets

    Uploaded by

    Wawex Davis
    8 views1 page
    The accounting equation states that assets equal liabilities plus equity. Assets are controlled, result from past events, and provide future economic benefits. Liabilities represent present obligations resulting from past events that require giving up resources. Equity is calculated as assets minus liabilities and represents net assets or net worth. The expanded accounting equation includes income and expenses, with income increasing equity through inflows or decreases in liabilities and expenses decreasing equity through outflows or increases in liabilities.

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    CHAPTER 3.docx

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    The accounting equation states that assets equal liabilities plus equity. Assets are controlled, result from past events, and provide future economic benefits. Liabilities represent present obligations resulting from past events that require giving up resources. Equity is calculated as assets minus liabilities and represents net assets or net worth. The expanded accounting equation includes income and expenses, with income increasing equity through inflows or decreases in liabilities and expenses decreasing equity through outflows or increases in liabilities.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as docx, pdf, or txt
    8 views1 page

    Assets Liabilities + Equity (A L+E) Assets

    Uploaded by

    Wawex Davis
    The accounting equation states that assets equal liabilities plus equity. Assets are controlled, result from past events, and provide future economic benefits. Liabilities represent present obligations resulting from past events that require giving up resources. Equity is calculated as assets minus liabilities and represents net assets or net worth. The expanded accounting equation includes income and expenses, with income increasing equity through inflows or decreases in liabilities and expenses decreasing equity through outflows or increases in liabilities.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
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    of 1

    CHAPTER 3

    (The Accounting Equation)

    Assets= Liabilities + Equity (A=L+E)

    Assets
    1. Control
    2. Past Events
    3. Future Economic Benefits

    Liabilities
    1. Present Obligation
    2. Past Events
    3. Giving up of resources (Outflow of Economic Benefits)

    Obligating Event
    1. Legal Obligation
    1. Contract
    2. Law
    3. Other operation of law
    2. Constructive Obligation

    Equity (Capital, Net Assets, Net Worth)


    --assets minus liabilities

    Expanded Accounting Equation

    Assets= Liabilities + Equity +Income – Expenses


    (A=L+E+I-E)

    Income
    --increases in economic benefits
    --inflows, enhancement of assets, decreases of liabilities

    Expenses
    --decreases in economic benefits
    --outflows, depletion of assets, increases of liabilities

    Income > Expenses = Profit (increases equity)


    Income < Expenses = Loss (decreases equity)

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