Equity: Equity is an essential aspect of a company's financial health as it represents the value of the company that belongs to the owners or shareholders. It calculates various financial ratios, such as return on equity and earnings per sha...
An account is a record used to track and classify transactions pertaining to a specific asset, liability, or equity component. 12 Can an organization have multiple ledgers or accounts? Yes, an organization can maintain multiple types of ledgers and numerous accounts within each ledger, depending on...
memorandum accounts & any drawing account. Generally, these accounts are used to prepare the business’s Income statement. At the end of the period, closing entries are recorded to summarize the balance of the temporary accounts which gives us the net profit/loss made by the...
other side (assets = liabilities + owners’ equity). The assets of a business entity are subject to two types of claims that arise from its two basic sources of capital—liabilities and owners’ equity. Theaccounting equation is the foundation for double-entry bookkeeping, which uses a scheme...