Accounting Equations and Financial Analysis

6 Questions

Activos = Pasivos + Patrimonio Neto

Activos = Pasivos + Acciones Comunes + Ganancias Retenidas

Aumenta el patrimonio neto

Disminuyen los pasivos y disminuyen los activos

Preparar estados financieros

Aumentan los activos y aumentan el patrimonio neto

Study Notes

Assets = Liabilities + Equity
This equation represents the relationship between a company's resources (assets), debts (liabilities), and ownership interest (equity)

Assets = Liabilities + Common Stock + Retained Earnings
This equation breaks down equity into its two components: common stock and retained earnings

Increases in assets:
- Increase equity if financed internally (e.g., retained earnings)
- Increase liabilities if financed externally (e.g., loans)
Decreases in assets:
- Decrease equity if used internally (e.g., dividends)
- Decrease liabilities if paid off externally (e.g., debt repayment)
Increases in liabilities:
- Increase assets if used to acquire resources
- Increase equity if incurred to benefit owners (e.g., salaries)
Decreases in liabilities:
- Decrease assets if used to pay off debts
- Decrease equity if used to benefit owners (e.g., dividends)

Helps to ensure accuracy and consistency in financial reporting
Provides a framework for analyzing and understanding financial transactions
Allows for the preparation of financial statements, such as the balance sheet and income statement