Property and Financial Claims

Property Property is anything of value that a person or business owns and therefore controls A major function of accounting is to provide financial information about property and financial claims to that property

Financial Claims A financial claim is the legal right to property Property and financial claims are measured in dollar amounts When you buy property with cash you acquire all of the financial claim

Financial Claims When you purchase property on credit (buy now, pay later) you share financial claim with a creditor (institution that loans money) The owner maintains control of the property unless the terms of the loan are not met then the creditor can gain control of the property.

Financial Claims in Accounting Property owned by businesses is known as assets Different types of assets Cash Office Equipment Manufacturing Equipment Land Buildings Vehicles

Equities, Liabilities and Assets Equity: The financial claims to assets Liabilities: A company's legal debts or obligations that arise during the course of business operations. Liabilities are settled over time through the transfer of economic benefits including money, goods or services. A resource with economic value that an individual, corporation or country owns or controls with the expectation that it will provide future benefit.

Equities, Liabilities and Assets Separate terms for creditors and owners claims Owners claims = Owners Equity Creditors claims = Liabilities

Questions Complete odd number problems in Math for Accounting and even problems in Balancing the Accounting Equation