Identify the basic formula of a balance sheet and give an example of an item that might fall under each major component of the formula.
A.Assets = liabilities + owners equity
B.Assets - two categories
1.Current - include cash and anything else that is expected to be converted into cash or consumed in the operation of the business during a period of one year or less.Examples: cash,inventory,accounts receivable
2.Fixed - Fixed assets are those that are tangible and will be used over a long period of time.Example: equipment
C.Liabilities - two categories
1.Current - due within one year,example accounts payable
2.Long-term - anything due over one year,example notes payable/bank loan
D.Owner's Equity
1.This amount represents the excess of all assets over all liabilities.It represents the net worth of the business.Examples: retained earnings,profit,monies invested in business by entrepreneur

Question

Quizplus · Accepted Answer

The Answer of Identify the basic formula of a balance sheet and give an example of an item that might fall under each major component of the formula.
A.Assets = liabilities + owners equity
B.Assets - two categories
1.Current - include cash and anything else that is expected to be converted into cash or consumed in the operation of the business during a period of one year or less.Examples: cash,inventory,accounts receivable
2.Fixed - Fixed assets are those that are tangible and will be used over a long period of time.Example: equipment
C.Liabilities - two categories
1.Current - due within one year,example accounts payable
2.Long-term - anything due over one year,example notes payable/bank loan
D.Owner's Equity
1.This amount represents the excess of all assets over all liabilities.It represents the net worth of the business.Examples: retained earnings,profit,monies invested in business by entrepreneur

Identify the Basic Formula of a Balance Sheet and Give