What’s the Accounting Equation?
Assets = Liabilities + Owner’s Equity
Time Period Concept
Each fiscal period should be kept the same length.
Principle of Consistency
Accounting must be kept consistent, done the same way every time.
Business Entity Concept
Accounting for a business must be kept separate from all others, like personal.
Full Disclosure Principle
Anything relevant to a company’s financial statement must be included.
Principle of Conservatism
Accounting for a business must be kept fair and reasonable.
What’s the purpose of a balance sheet?
To show the assets, liabilities, and owner’s equity, as well as the financial standing of the business in that time period.
A holding account for money that you will receive later.
A holding account for money that you will pay.
What’s the purpose of the General Journal?
It shows the debit/credit for each transaction, and assigns those debits/credits to accounts.