 Total assets = Total liabilities + Total Equity

 Total Equity = Beginning capital + profit (loss) – withdrawals

 Profit = Revenue – Expenses
 Additional investment or withdrawal = Total equity – (beginning capital + profit)

 Rent expense or any other expense will reduce a company’s owner’s equity
 Supplies are expenses
 The balance Sheet reports assets, liabilities and equity
 The income statement reports revenue and expenses

Assets= Liabilities + Equity

Any liquid or non-liquid Financial obligations such as: What is left after subtracting
assets such as: liabilities from assets
Cash Accounts payable (bought Common stock
goods on credit)
Bills Wages Owner’s draws
Accounts receivable (sells Rent Retained earnings
goods on credit)
Inventory Utilities
Property Bank Debt
Equipment Deferred tax liability
Long-term debt

 Accounts payable: -Liabilities -Balance sheet

 Cash: -Assets -Balance sheet
 Owner’s capital: -Owner’s equity -Balance sheet
 Account receivable: -Asset -Balance sheet
 Rent expenses: - Liabilities -Income statement
 Service Revenue: -Assets -Income statement
 Office supplies: -Assets -Balance sheet
 Owner’s equity: -Owner’s equity
 Land: -Assets -Balance sheet
 Salaries expenses: -Liabilities -Income statement