Liabilities and Equity of this situation:
The business was put up from a cash of P200,000,the initial capital of the owner.Then,40,000 of the cash was used to purchase an equipment to be used in business.The purchase of equipment resulted in a liability of P20,000.How much are the total assets of the business?
Answers
Answer:
An accounting transaction is a business activity or event that causes a measurable change in the accounting equation. An exchange of cash for merchandise is a transaction. Merely placing an order for goods is not a recordable transaction because no exchange has taken place. In the coming sections, you will learn more about the different kinds of financial statements accountants generate for businesses.
In the previous section we described specific types of accounts that business activities fall into, namely:
Assets (what it owns)
Liabilities (what it owes to others)
Equity (the difference between assets and liabilities or what it owes to the owners)
These are the building blocks of the basic accounting equation. The accounting equation is:
ASSETS = LIABILITIES + EQUITY
Answer:
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Explanation:
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