Summary Business Economics

Summary Business Economics

Balance sheet

Debit  credit

Assets = everything you own
Equity = everything you buy yourself
Liabilities (debts) = lone everything you have to pay back
Capital = the money that a company owns

Interest = rente

Equity = assets – liabilities
(it is the owner’s claim to the possessions of the company)

Inventories = the amount of goods you still have for sale
Accounts receivable = the money that the company still needs to receive from clients
Accounts payable = money that you still need to pay back to investors/companies

Balance sheet  shows assets, liabilities and equity of a company at a certain moment. The balance
sheet changes with the (financial) activities of the company.




Journal Entries
Bookkeeping = a very organized (structured) method to keep track of the changes in the balance
sheet.

It starts with opening the LEDGER accounts.  only for the liabilities and assets.

Changes in the balance sheet are now recorded in the ledger.


Items on balance sheet  leger accounts
Changes in these leger accounts: in journal entries:
Rule:
Increase  same side
- Assets: debit side
- Liability: credit side
Decrease  other side
- Assets: credit side
- Liability: debit side

In journal entries: never use equity