| A | B |
|---|
| What is the balance sheet equation? | ASSETS = LIABILITIES + OWNER'S EQUITY |
| List the common assets. | cash, accounts receivable, inventory, prepaid expenses, land. |
| List the common liabilities. | accounts payable, accrused expenses (wages and salaries), tax liability, notes payable. |
| What are the nominal owner's equity accounts? | revenue, expenses |
| What are the regular owner's equity accounts? | capital, withdrawl |
| What is the income statement equation? | Sales - Cost of Goods Sold = Gross Margin - Expenses = Net Margin |
| A debit is represented by an increase in which accounts? | Assets and Expenses |
| A debit is represented by a decrease in which accounts? | Liabilities, Owner's Equity and Revenue. |
| Describe the relationship between assets and expenses? | Inventories bought in anticipation of future nedd is an asset, as soon as it is sold it is considered an expense. |
