Respuesta :
Answer:
Long Print Shop
Balance sheet for the year ended December 31, 2020
Amount in $ Amount in $
Assets
Non-current asset
Equipment 20,000
Current assets
Merchandise inventory 14,000
Cash 50,000
Total current asset 64,000
Total assets 84,000
Liabiities
Accounts payable 38,000
Total liabilities 38,000
Equity
Capital 46,000
Total equity 46,000
Total liabilities and equity 84,000
Explanation:
The accounting equation shows the relationship between the elements of a balance sheet which are assets liabilities and equity. This may be expressed mathematically as
Assets = Liabilities + Equity
While assets include fixed assets, cash, inventories, account receivables etc, liabilities include accounts payable, loans payable, accrued expenses etc.
Equity which represents the amount owed to the owners of the business includes retained earnings (which is the accumulation of the net income/loss over the years less dividends paid) and common shares.
