accounting terms after completing this tutorial… 1.you will be able to distinguish between an...
TRANSCRIPT
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Accounting Terms
After completing this tutorial…
1. You will be able to distinguish between an asset and a liability.
2. You will recognize that it’s beneficial to have more assets than liabilities
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AssetClick on the pictures below to see the value of the asset
Moving on…
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Asset- New Computer
New computer worth $1700.00
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Asset- Cash in Bank
Checking account balance $525.00
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Asset- Business Car
Business car worth $20,000.00
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Asset- Building
Building you purchased for $250,000.00
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Asset- Office Supplies
Office supplies purchased for $75.00
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Asset – Accounts Receivable
I will receive the money
later
•When a person owes YOU money, this is also an asset.
•The asset is called “Accounts Receivable”.
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Asset – Prepaid Insurance
I’ve paid my 6 month
insurance premium
•When you pay insurance premiums covering your property, this is also an asset.
•Making payments in advance is called a “prepaid asset”.
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Definition of an
• An asset is anything of value that is owned
• An asset may be something which is paid for in advance, like prepaid insurance or prepaid rent.
• Money you will receive later – Accounts Receivable
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Check and Review
Which account is NOT an asset.
1. Desk
2. Prepaid insurance
3. Money you owe another person
4. Money that another person owes you
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Prepaid Insurance
Try again… Remember, prepaid insurance is an asset because it has value.
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Desk
Try again, a desk is an asset because it has value.
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Money you owe another person
• Great job! Money $ you owe another person would not be of value to you because you will eventually have to pay the person off.
• Money you owe is a LIABILITY
Moving onto Liabilities …
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Money that another person owes you
Let’s think about this…
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Money that another person owes you
• If a person owes you money, this is a good thing because you eventually will receive the money & this has value.
• The question was which account is NOT an asset.
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Liability
I will pay you later
A liability is when you owe another person or business money.
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Liability
1.A liability is when you owe another person or business money.
2.Liabilities typically include the word “payable” in the description.
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Examples of Liability Accounts
• Accounts Payable
• Notes Payable
• Federal Income Tax Payable
• Social Security Tax Payable
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Check and Review
So what’s the key word for a liability?
Payable Receivable
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Let’s think…
Receivable means that you will “receive” money at a later date.
Let’s try again
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Liability Review Accounts Payable
Great job,
The key word for liability is payable
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Check and Review - Asset
Select the asset below
Money I owe a business
Money that someone owes me
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Asset Review – Accounts Receivable
Great job,
An asset is something of value.
since someone owes you money it’s a good thing. It’s worth something!!!
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Review – Accounts Payable
Let’s think about this…
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Review – Accounts Payable
Remember, if you owe another person money it’s not really a good thing. When you owe another person, you have a Liability.
Try Again
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Which asset would require you to borrow more money from the bank?
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Larger asset/larger debt
Great job,
Since the building is a larger asset which costs more than a car, you would incur a higher debt.
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Smaller asset/smaller debt
Try Again,
Since the car probably costs less than the building, you would not need to borrow as much money from the bank.
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Check and Review
Which would you prefer?
Accounts Payable Accounts Receivable
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Review – Accounts Payable
Let’s think about this…
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Review – Accounts Payable
Remember, if you owe another person money it’s not really a good thing. When you owe another person, you have a Liability.
Try Again
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Accounts Receivable
Give yourself a high 5!!!
You’ve mastered the concept of distinguishing between accounts receivable (an asset) from accounts payable (a liability).
Finished – return to home page
Verify that you have mastered the 2 objectives of this lesson. Submit a one-minute paper answering the questions & mention how you liked this lesson.
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Review – Accounts Payable
Remember, if you owe another person money it’s not really a good thing. When you owe another person, you have a Liability.
Try Again