Page 29 - Account for Ag - 2019

CH 2] Accounting Equation 2-5

Assets = Liabilities + Equity
Cash + Equipment + Product = DuPont Chem + J. Newell, Capital
1) $60,000 $60,000
2) -$ 2,500 + $ 2,500

Balances $57,500 + $2,500 + = $60,000
3) -$35,000 + $35,000 =
Balances $22,500 + $2,500 + $35,000 = $60,000

4) + $3,500 = +$3,500
Balances $22,500 + $2,500 + $38,500 = $3,500 + $60,000
2
5) -$1,500 + = -$1,500
Balances $21,000 + $2,500 + $38,500 = $2,000 + $60,000

6) +$ 4,500 + -$ 2,300 = +$ 2,200
Balances $25,500 + $2,500 + $36,200 = $2,000 $62,200
7) -$ 1,400 + = -$ 1,400

Balances $24,100 + $2,500 + $36,200 = $2,000 $60,800

ACCOUNTING STATEMENTS

There are two principal accounting summaries: one lists the kinds and the amounts of property of the business,
together with the ownership rights in the property; the other reports the effects of the operations of the business on
the owner's equity or right in the property. The first of these summaries is known as the BALANCE SHEET; it
shows the assets, the liabilities, and the equity. The second summary is known as the INCOME STATEMENT; it
lists the income and the costs of operation for the period, which result in an increase or a decrease in owners
equity. The BALANCE SHEET gives a picture of financial condition at a given moment of time; the INCOME
STATEMENT covers the period of time between two balance sheets.

For example, the information needed to prepare a balance sheet for Newell's Feed and Supply Co. after
transaction (7) appears on the last line of the tabulation shown above. The income statement for the period would
report the amount of sales, the cost of the goods that were sold, the various expenses, and the net income or loss.
From an accounting point of view, the life of any business enterprise is a succession of balance sheets, usually
prepared annually and tied together by income statements, each covering one year. When statements are prepared
annually, the income statement covers the year following the previous balance sheet and ending with the date of
the present balance sheet. If the life of a business enterprise is represented by a line starting at point X and moving
toward the right, accounting statement may be diagrammed as follows:

Balance Sheet Balance Sheet Balance Sheet Balance Sheet
Dec. 31, 2021 Dec. 31, 2022 Dec. 31, 2023 Dec. 31,2024

T H E L I F E O F A B U S I N E S S

X

Income Statement Income Statement Income Statement
2022 2023 2024

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