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-   -   Balance sheet using accounting equation (https://www.askmehelpdesk.com/showthread.php?t=132073)

  • Sep 21, 2007, 08:26 AM
    bluedenim
    balance sheet using accounting equation
    OK the question is to present the accounts and balances in the form of the accoutnign equation
    Assets=liabilies+shareholders Equity

    I am assuming this means:
    assetts=Liabilites+owners Equity-drawings+revenues-expenses

    would this be correct?

    if so I can not get it to balance.

    I am assuming the following would be assets
    accounts recievable
    cash
    dividends payable
    gains on assets
    Intangible assets
    inventories
    other assets
    pre paid expenses

    Liabilities would be:
    accounts payable/accured expenses
    long term debt
    other liabilites

    I am assuming revenue is:
    sales revenues

    I am assuming expenses are:
    cost of goods and sold expenses
    Depretiation/amortization expenses
    income tax expenses
    interest expenses
    operating expenses
    property/equiptment/plant

    what am I doing wrong here?
  • Sep 21, 2007, 12:36 PM
    CaptainForest
    Mistakes that I have noticed:

    All Payable are liabilities. Therefore, dividends payable should not be under assets, but under liabilities.

    Same for gains, they are like revenue, which is an income statement account, but are reflected by increasing equity on the right side of your equation, so it is a credit. Gains on assets is basically a revenue type account.

    property/equiptment/plant are ASSETS, not expense. They could include machinery, computers, buildings, land, etc.

    Remember:
    The word payable means liability.
    The word expense means an expense.
    The word gain means revenue.

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