Following the Rules Generally Accepted Accounting Principals (GAAP) The rules companies follow when they are reporting their data to others. Financial Accounting Standards Board (FASB) Responsible for developing Accounting Principals
AssetsLiabilities Owners Equity Assets LiabilitiesOwners Equity 5000 200 1700 The owner deposits $5,000 cash into the company. They purchase $200 worth of supplies and pay for it in cash. They buy $1,700 worth of office equipment and charge it to pay later.
More Transactions a) Bob Bingo makes a deposit into his new company of $15,000. b) The Business purchases some land for the company for $10,000. c) The company purchases $1,350 worth of supplies, but we put in on our charge account to pay for it later when they bill us. d) We did some work for customers and they are paying us $7,500. e) We have to pay some of our expenses: wages $2,125, rent $800, and utilities $275. f) The bill for the supplies has arrived, and we need to make a payment. We are going to pay $950 of the $1,350 we owe. g) At the end of the month Bob Bingo withdrawals $2,000 for personal use.
What are our Account Balances? Assets Cash $6,350 Supplies $1,350 Land $10,000 Liabilities $400 Owners Equity $17,300 Total Assets $17,700Total Liabilities and Owners Equity $17,700