Tag: equation

The Accounting Equation And Basic Math Concepts (3)

AccountingThis formula works best for large corporations and those businesses with investors. For example, if a small business sells a widget to a customer for $1,000 and it cost $700 to produce, the accounting transaction would be an increase to cash (assets) by the amount received from the customer, an increase to revenue (owner’s equity) by the same amount, a decrease to inventory (assets) by the amount it cost to produce the widget, and an increase the cost of goods sold expense account (owner’s equity) for the amount it cost to produce the widget.

Accounting is an art as well as science which systematical process that identifies, records, classifies and communicates the economic facts and figures of an organization This process is a combination of a series of activities begin when a transaction take place and end with its inclusion in the financial statements at the end of the accounting …