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In Accounting there are plenty of formulas, theories, and equations, but by far the most important is the following: Assets = Liabilities + Equity First, I will describe in layman’s terms the three variables within the equation above. An asset is a resource that will be used to operate a business (e.g. inventory, plant, machinery). A liability is a creditors right to the resources within the business (e.g. loan, accounts payable). Equity is the owner’s interest in the business (e.g. stock, retained earnings). Home ownership is an easy way to understand the relationship between the three variables. The house itself is an asset because it can be used to generate revenue from rent or a business can be ran within the home (e.g. daycare, tax preparation). The mortgage on the home is a liability because a mortgage is a loan from a bank. The home is collateral for the loan, so if the owner cannot pay back the loan the bank will be able to take ownership of the... read more

I put this together to help one of my students.  Feel free to use it.     Series discount procedure: The list price for a winter coat is $300.00. A series discount of 20/15/5 is being offered for any orders above $9,000.00. Find (A) the discount and (B) the net price of an order of 40 coats. Step 1: Calculate the discounted prices: 20% off is an 80%% price (0.8). 15% off is an 85% price (0.85). And 5% off is a 95% price (0.95). Step 2: Multiply the discounts against each other. .8 x .85 x .95 = .646 (This is the (A) Discount) Step 3: Calculate the non-discounted price: 40 coats at $300 each, equals $12,000.000 Step 4: Calculate the discounted price: Multiply the (A) Discount by the non-discounted price: 0.646 * 12000 = a net price of $7,752.00 NOTE (n30 means NET 30, or that the entire amount becomes due if not paid in 30 days from invoice date.) Step 5:... read more

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