Card Set Information
An individual, Association, or organization that engages in economic activities and controls specific economic resources
The business entity's fincances are kept separate from the owner's nonbusiness assets and liabilities.
(Business Entity Concept)
Items owned by a business that will provide future benefits.
"Owned Not Rented"
Cash,Merchandise,Supplies,Furniture, Fixtures,Machinery,Buildings, & Land.
The amount of money owed to the business by its customers as a result of making sales "on account" or "on credit"
Simply, customers who have promised to pay sometime in the future.
Money Someone Owes Us
- A probable future outflow of assets as a result of a past transaction or event.
- Debts or obligations of the business that can be paid with cash, goods, or services.
Accounts Payable, Notes Payable,
-An unwirtten promise to pay a supplier for assets purchased or services rendered
-Referred to as making a purchased "on account" or "on credit"
Money We Owe
Formal written promises to pay suppliers or lenders specified sums of money at definite future times.
Amount by which the business assets exceed the business liabilities.
If a business has a total assets of $100,000 & total liabilities of $60,000.
What is the owner's equity?
$100,000 - $60,000=$40,000
Assets - Liabilites = Owner's Equity.
Assets= Liabilities + Owner's Equity.
Once the debts are paid, the remaing assets belong to the owner.