Accounting Equations

Vocabulary flashcards covering standard accounting equations and financial statement components.

Balance Sheet

A financial statement governed by the equation $\text{Assets} = \text{Liabilities} + \text{Owner's Equity}$.

Statement of Owner's Equity

A financial statement governed by the equations $\text{Owner's Equity} = \text{Contributed Capital} + \text{Retained (accumulated) earnings}$ and $\text{Retained Earnings} = \text{Past Retained Earnings} + \text{Net Income} - \text{Withdrawals}$.

Income Statement

A financial statement governed by the equation $\text{Net Income} = \text{Revenues} - \text{Expenses}$.

Owner's Equity

An accounting component defined as $\text{Contributed Capital} + \text{Retained (accumulated) earnings}$.

Retained Earnings

An accounting component defined as $\text{Past Retained Earnings} + \text{Net Income} - \text{Withdrawals}$.

Net Income

An accounting metric defined as $\text{Revenues} - \text{Expenses}$.