Grade 10 Accounting
CHAPTER 9: ACCOUNTING Businesses engage in activities that concentrate on financial worth, such as money, spending, expenses, mergers, and costs. Accountants make meaningful and effective decisions based on up to date and accurate records of a company.
Accounting is the process of recording, analyzing, and interpreting the financial or economic activities of a business. Financial activities in business are recorded as transactions: recording something of value for something else of value. Bookkeeping is the recording of all transactions for a business in a specific format.
Assets
Assets are things of value that a business or person owns. Including
Liabilities
Liabilities are debts or amounts of money that are owed to others by an individual or a business.
Owner’s Equity or Net Worth
A person’s or business’ assets, after all liabilities are deducted, is known as owner’s equity or net worth
Balance Sheet Equations
The balance sheet equation can be expressed in two ways:
1. To determine owner’s equity: Assets – Liabilities = Owner’s Equity
2. To determine total assets: Assets = Liabilities + Owner’s Equity
Preparing a Balance Sheet
The balance sheet shows the financial position on any given day of the business, and provides information about its assets, liabilities, and equity.
Balance Sheet Equation Method
The balance sheet gets its name because the left side of the equation (assets) always equals the right side (liabilities plus owner’s equity).
Assets are owned by one of two groups
1. Owner’s of the business (owner’s equity)
2. Individuals or businesses owed money (liabilities)
Preparing an Income Statement
The income statement is a financial statement that shows a business’ profit (or loss) over a stated period of time.
The money, or the promise of money, received from the sale of goods or services is called revenue.
Expenses are expenditures that help a business generate revenue.
Accounting is the process of recording, analyzing, and interpreting the financial or economic activities of a business. Financial activities in business are recorded as transactions: recording something of value for something else of value. Bookkeeping is the recording of all transactions for a business in a specific format.
Assets
Assets are things of value that a business or person owns. Including
Liabilities
Liabilities are debts or amounts of money that are owed to others by an individual or a business.
Owner’s Equity or Net Worth
A person’s or business’ assets, after all liabilities are deducted, is known as owner’s equity or net worth
Balance Sheet Equations
The balance sheet equation can be expressed in two ways:
1. To determine owner’s equity: Assets – Liabilities = Owner’s Equity
2. To determine total assets: Assets = Liabilities + Owner’s Equity
Preparing a Balance Sheet
The balance sheet shows the financial position on any given day of the business, and provides information about its assets, liabilities, and equity.
Balance Sheet Equation Method
The balance sheet gets its name because the left side of the equation (assets) always equals the right side (liabilities plus owner’s equity).
Assets are owned by one of two groups
1. Owner’s of the business (owner’s equity)
2. Individuals or businesses owed money (liabilities)
Preparing an Income Statement
The income statement is a financial statement that shows a business’ profit (or loss) over a stated period of time.
The money, or the promise of money, received from the sale of goods or services is called revenue.
Expenses are expenditures that help a business generate revenue.