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Financial Accounting Course |
| U.S. GAAP Codification | IFRS International Standards | Accounting Topics |
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Equity Accounts 01 Examples and Practice Questions |
U.S. GAAP
Codification,
Accounting
Textbooks |
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Financial
Accounting,
Intermediate
Accounting,
Advanced
Accounting
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U.S. GAAP by Topic,
Accounting by Topic
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Equity 1. Equity represents the owners' equity 2. For corporations, shareholders are owners --> equity represents the shareholders' equity 3. Equity is a residual concept --> equity is what's left after subtracting liabilities from assets 4. Equity = Assets - Liabilities
Components of equity1. Paid-in capital --> the amount shareholders contributed to the entity --> in exchange of the shares of common stock or preferred stock 2. Retained earnings --> net income is accumulated in retained earnings --> dividends are paid from retained earnings
Debits and credits1. Equity accounts have normal balances on the credit side 2. Increases in equity accounts are recorded on the credit side 3. Decrease in equity accounts are recorded on the debit side |
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Practice Questions 1. Issuance of common stock Entity A issued 8,000 shares of common stock Par value = $1 per share Issue price = $10 per share
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Examples of equity accounts
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Codification Topics at the 100 Level |
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Topic
105: Generally Accepted Accounting Principles |