Assets do not need to provide future

benefit to the business.

Assets can be recorded at the market value if

acquired at a bargain.

Assets are something of value the business

owns or controls.

Assets include Cash, Merchandise

Inventory, and Accounts Payable.

A creditor who has loaned money to a business

has a claim to some of the business's assets until the business pays the debt.

Many, but not all, liabilities have the

word

Liabilities represent one of the two claims to

assets.

Liabilities are economic resources that are

expected to benefit the business in the future.

Assets + Revenues = Equity

Assets + Revenues = Liabilities + Expenses

Assets + Liabilities = Equity

Assets = Liabilities + Equity

expenses

equity

return on assets

debt

Profit and cash statement 

Balance sheet

Income statement or Statement of cash flows

Income statement

€240000

€20000

€220000

€200000

A sole proprietorship joins two or more

individuals as co-owners.

The sole proprietor is personally liable

for the liabilities of the business.

A sole proprietorship has to publish its annual financial statements.

A sole proprietorship is taxed separately from

the owner.

company managers

customers

potential investors

creditors

owners are liable for each other's actions

owners pay income tax on their share of

earnings

owners are personally liable to pay the

company's debts

business terminates at the death of a owner