Summary FAC1502 Exam preparation

FAC1502 Notes and tips to help you prepare and study for the exam

The Accounting cycle:




The financial position of a company is measured by the following items:

 Assets (what the company owns).
 Liabilities (what the company owes to others).
 Owner’s Equity (the difference between the assets and liabilities).

The formulas for the accounting equation are as follows:
Owner’s Equity = Assets – Liabilities (O = A – L)
Assets = Liabilities + Owner’s Equity (A = L + O)
Liabilities = Assets – Owner’s Equity (L = A – O)




Q: Is equity and capital the same?

A: No, they are not:
Equity (or owner's equity) is the owner's
share of the assets of a business
(assets can be owned by the owner or
owed to external parties - debts).

,Basic Accounting Equation:




Assets = Equity + Liabilities
Debit (+) Credit (-) Debit (-) Credit (+) Debit (-) Credit (+)

,