and Answers Updated 2026
TheMaccountingMequationMstates:M-MAnswerMAssetsM=MLiabilitiesM+MOwnersMEquity
Owner'sMEquityMhasMtwoMcomponents:M-
MAnswerMOwner'sMEquityM=MContributedMCapitalM+MRetainedMEarnings
ContributedMCapitalM-
MAnswerMTheMamountMofMpaymentsMinMcashMorMassetsMthatMtheMownersMhaveMmade
MtoMtheMcompany
TheMaccountingMequationMcanMbeMexpandedMto:M-
MAnswerMAssetsM=MLiabiltiesM+MContributedMCapitalM+MRetainedMEarnings
TheM5MdifferentMaccountsMofMaMtypicalMfor-profitMorganizationM-MAnswerM-
MassetMaccounts
-MliabilityMaccounts
-MrevenueMaccounts
-MexpenseMaccounts
-Mowners'MequityMaccounts
AssetMaccountsM-MAnswerMContainsMtheMvalueMofMitemsMownedMbyMtheMorganization
LiabilityMaccountsM-
MAnswerMIndicatesMtheMmoneyMthatMtheMorganizationMowesMtoMitsMcreditors
AssetMaccountsMinclude:M-MAnswerM-MCash
-MAccountsMreceivable
-MprepaidMexpenses
-Minventory
LiabilityMaccountsMincludeM-MAnswerM-MaccountsMpayable
-MsalariesMandMwagesMpayable
, -MvacationMpayMpayable
RevenueMaccountsM-
MAnswerMUsedMtoMrecordMtheMincomeMearnedMbyMtheMorganizationMduringMtheMaccou
ntingMcycle
ExpenseMaccountsM-
MAnswerMCostsMincurredMbyManMorganizationMinMtheMprocessMofMearningMrevenueMduri
ngMaMdesignatedMperiodMofMtime
EquityMaccountsM-
MAnswerMAccountsMthatMshowMtheMowners'MorMshareholders'MworthMorMinterestMinMth
eMorganization
Owners'MequityMisMdividedMinto:M-MAnswerMContributedMcapitalM&MretainedMearnings
GeneralMledgerMaccountsMconsistsMofMtheMfollowingMfiveMelements:M-MAnswerM-
MaccountMname
-MopeningMbalance
-Mreference
-MdebitMandMcreditMtransactions
-MclosingMbalance
EachMjournalMentryMmustMcontainMtheMfollowingMcomponents:M-MAnswerM-
MAMjournalMentryMreferenceMorMnumber
-MtheMdateMofMtheMtransaction
-MtheMdebitMandMcreditMamountsMtoMbeMappliedMtoMeachMaccount
-MaMtotalMofMtheMdebitMentriesMandMofMtheMcreditMentries
-MaMbriefMexplanationMofMtheMtransaction
double-entryMaccountingM-
MAnswerMAccountingMsystemMinMwhichMeachMtransactionMaffectsMatMleastMtwoMaccount
sMandMhasMatMleastMoneMdebitMandMoneMcredit