First Class Expanded Accounting Equation Examples

The expanded accounting equation allows you to see separately 1 the impact on equity from net.

Expanded accounting equation examples. The expanded accounting equation for a corporation provides more details for the stockholders equity amount shown in the basic accounting equation. The main limitation of the accounting equation is that it doesnt provide an analysis of how well the business is operating. Following is the expanded accounting equation of corporations.

Expanded Accounting Equation The Expanded Accounting Equation of sole proprietorship and partnership is Accounting Equation Assets Liabilities Owners Equity Expenses Revenue Drawings Account. Assets Liabilities Paid-in Capital Revenues Expenses Dividends Treasury Stock. The balance sheet is a financial statement which represents the accounting equation in a more detailed and expanded manner.

Lets take a look at a few example business transactions for a corporation to see how they affect its expanded equation. About Press Copyright Contact us Creators Advertise Developers Terms Privacy Policy Safety How YouTube works Test new features Press Copyright Contact us Creators. Assets Liabilities Owners Equity What is the Expanded Accounting Equation.

At the beginning of the year Corporation X was formed and 1000 10 par value stocks were issued. In this form of equation we only play with equity portion and leave the assets and liabilities as it is. However each item in this equation can be further expanded which will give us the expanded accounting equation.

Assets Paid-up Capital Income Expenses Dividends Treasury shares. Therefore the expanded accounting equation is also different for different forms of business. As it is clear from the name of the topic when we expand the standard accounting equation further it is called Expanded Accounting Equation.

For example a company will use. Changes in the accounting equation get recorded through double-entry bookkeeping. The expanded accounting equation for a sole proprietorship is Assets Liabilities Owners Capital Revenues Expenses Owners Draws The eight transactions that already been listed under the basic accounting equation are demonstrated in the expanded accounting equations So you can calculate the Net Income.