Summary Business Economics
Balance sheet
Debit credit
Assets = everything you own
Equity = everything you buy yourself
Liabilities (debts) = lone everything you have to pay back
Capital = the money that a company owns
Interest = rente
Equity = assets – liabilities
(it is the owner’s claim to the possessions of the company)
Inventories = the amount of goods you still have for sale
Accounts receivable = the money that the company still needs to receive from clients
Accounts payable = money that you still need to pay back to investors/companies
Balance sheet shows assets, liabilities and equity of a company at a certain moment. The balance
sheet changes with the (financial) activities of the company.
Journal Entries
Bookkeeping = a very organized (structured) method to keep track of the changes in the balance
sheet.
It starts with opening the LEDGER accounts. only for the liabilities and assets.
Changes in the balance sheet are now recorded in the ledger.
Items on balance sheet leger accounts
Changes in these leger accounts: in journal entries:
Rule:
Increase same side
- Assets: debit side
- Liability: credit side
Decrease other side
- Assets: credit side
- Liability: debit side
In journal entries: never use equity
Balance sheet
Debit credit
Assets = everything you own
Equity = everything you buy yourself
Liabilities (debts) = lone everything you have to pay back
Capital = the money that a company owns
Interest = rente
Equity = assets – liabilities
(it is the owner’s claim to the possessions of the company)
Inventories = the amount of goods you still have for sale
Accounts receivable = the money that the company still needs to receive from clients
Accounts payable = money that you still need to pay back to investors/companies
Balance sheet shows assets, liabilities and equity of a company at a certain moment. The balance
sheet changes with the (financial) activities of the company.
Journal Entries
Bookkeeping = a very organized (structured) method to keep track of the changes in the balance
sheet.
It starts with opening the LEDGER accounts. only for the liabilities and assets.
Changes in the balance sheet are now recorded in the ledger.
Items on balance sheet leger accounts
Changes in these leger accounts: in journal entries:
Rule:
Increase same side
- Assets: debit side
- Liability: credit side
Decrease other side
- Assets: credit side
- Liability: debit side
In journal entries: never use equity
