Acc121 Course Project

1722 words 7 pages
1. | Question : | (TCO 1) The Accounting Equation is used to develop the organization's financial reports. (1) Describe what assets value would be if Liabilities are $12,000 and Owners' Equity is $50,000 by showing the Accounting Equation (10 points), and (2) provide an example of two asset accounts that could contain the value. (10 points) | | | Student Answer: | | 1.Assets=Liabilities+Owners Equity 12,000+50000 Assets=62,000 2.Cash and Equipment | | Instructor Explanation: | Textbook pages 11-12. Assets = $12,000 + $50,000 = $62,000. Cash and inventory are examples. | | | | Comments: | | | |

Question 2. | Question : | (TCO 1) The financial statements present a company to the public in financial
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The rule of debits and credits is the fundamental concept in the double-entry system in accounting which is based on the accounting equation. Assets equal liabilities plus capital or A=L+C is the basic accounting equation that for each accounting transaction, the total debit entries equal the total credit entries. Debit is the left side of the entry and credit is the right side of the entry. based on accounting equation, an increase in one account must be offset with an eqaul change to another account or accounts . Debit is the normal balance of an asset account, credit is the normal balance of a liability account and credit is the normal balance of a capital account. the normal balance of an account is the increase side of an account, hence a debit entry will increase an asset account, a credit entry will increase a liability account and a credit will increase a capital account. an increase in assets will cause an equal increase in either the liability or the capital account. the contribution of capital is on of the three accounting transactions that affect the owner's equity. the initial investment of $750000 in cash increases the capital account because the owner's contribution increases the capital account. Cash/Debit/$750,000 and owners' equity/Credit/$750,000 Assets and owners' Equity increase and the accounting equation is in balance. | | Instructor Explanation: | Textbook page 63. Cash/Debit/$750,000 and