introductory terms for accounting. intro to accounting terms on friday, we discussed three...
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Introductory Terms for Accounting
Intro to Accounting Terms
• On Friday, we discussed three introductory terms for accounting1. Asset2. Liability3. Equity (Net Worth)
ASSETS
• Assets – Anything tangible or intangible that is capable of
being owned or controlled to produce value and that is held to have positive economic value is considered an asset.
– Examples of something a business would own that would help it make money?
LIABILITIES
• Liability– an obligation of a business arising from past
transactions or events, the settlement of which may result in the transfer or use of assets (often cash), provision of services or other economic benefits in the future.
– Examples?
EQUITY
• The amount of money that a business is worth once a company has paid off all of its liabilities
• In other words
Equity = Assets – Liabilities
This is known as the accounting equation
The Accounting Equation
Bart’s Yard Sale
Net Worth Activity Sheet