Pretend that you own a business- I chose a custom blacksmithing shop. The business will be...
Pretend that you own a business- I chose a custom blacksmithing shop. The business will be a sole proprietorship with no employees.
- list at least 3 asset accounts and 3 liabilities accounts you would expect your new business to have.
- Lastly, assume you were to invest $50,000 into your new business venture. How would your ownership interest be presented in the equity section of the business balance sheet, specifically?
Homework Answers
3 asset accounts:
- Equipment and tools
- Cash
- Inventory: Raw material
3 Liability accounts:
- Accounts payable
- Accrued expenses
- Unearned revenue
Presentation of Ownership interest in Balance sheet:
| Owners equity: | |
| Owners Investment | $50000 |
| Net income for the year (assumed) | $5000 |
| Total Owners equity | $55000 |
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