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resources, things owned, and prepaid or deferred expenses; examples include cash, accounts receivable, inventory, prepaid insurance, equipment, vehicles, furnishings


Obligations and deferred revenues; examples include accounts payable, loans payable, wages payable, interest payable, customer deposits, deferred revenues. A way to remember this is that anything that owed means whomever is LIABLE or OBLIGATED to pay that amount.

owner's equity

a sole proprietorship's assets-liabilities

stockholders' equity

a corporation's assets-liabilities;reports paid-in capital, retained earnings, and treasury stock.

Accounting Equation

Assets=Liabilities + stockholders' equity

current asset

will turn to cash within one year of the date of the balance sheet(unless the operating cycle is greater than one year)

current liability

an obligation that will become due within one year of the balance date.(unless the operating cycle is greater than one year)

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