Accounting Chapter 1

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The capital account is the owner's liability account.

The accouting equation must be in balance to be correct.

When financial records for a business and for its owner's personal belongings are not mixed, this is an application of the Business Entity accounting concept.

When 2 asset accounts are changed in a transaction, there must be an increase and a decrease.

The accounting equation is most often stated as Assets + Liabilities = Owner's Equity

A balance sheet has three major sections -- Assets and Liabilities on the left side and Owner's Equity on the right side.

Assets are listed on the right side of the accounting equation.

Total assets are the amount the owner has invested in the business.