Accounting Made Simple: Accounting Explained in 100 Pages or Less (Financial Topics in 100 Pages or Less)

CHAPTER THREE The Income Statement

Assets = Liabilities + Owners’ Equity

Chapter 2 Simple Summary2

Current assets are those that are expected to be converted into cash within 12 months or less. Typical current assets include Accounts Receivable, Cash, and Inventory.

Current liabilities are those that will need to be paid off within 12 months or less. The most common example of a current liability is Accounts Payable. Notes Payable that are paid off over a period of time are split up on the balance sheet so that the next 12 months’ payments are shown as a current liability, while the remainder of the note is sh

CHAPTER TWO The Balance Sheet

My Asset is Your Liability

Assets = Liabilities + Owners’ Equity, …it might be easier to think of it this way: Assets – Liabilities = Owners’ Equity

In other words, owners’ equity (the part that often confuses people) is just a plug figure. It’s simply the leftover amount after paying off the liabilities/debts.