AAMI Accounting 1 Latest Update with Verified Solutions

AAMI Accounting 1 Latest Update with Verified Solutions Liabilities Debts that are owed to another for goods/services received/used but not yet paid for Ex. Accounts Payable Owner's Equity How much a business is worth in dollar value Revenue-Expenses = Capital Assets Things that a business owns or posses that are worth a specific dollar value Ex. Cash & Accounts payable Basic Accounting Equation Liabilities + Owner's Equity = Assets Revenue Money the business takes in from the sale of goods/services Fees Monies earned by services Expense Cost associated with doing business Net Profit When revenue exceeds expenses ^Gross Profit - Expenses = Net Profit Net Loss When expenses exceeds revenue Gross Profit - ^Expenses = Net Loss Gross Profit Equation Revenue - Cost of Goods = Gross Profit Capital Money invested into the business by the owner using their own funds Withdrawal Money an owner takes back out of the business for personal use/to pay themselves back Expanded Accounting Equation Liabilities + Capital In - Withdrawals + Revenue - Expenses = Assets Owner's Equity Equation (Capital in - Withdrawals) + (Revenue - Expenses) Double Entry Every transaction requires at least one debit and one credit to be affected Increases to Assets & Expenses Debits Increases to Liabilities, Capital & Revenue Credits