Examples include accounts payable, and notes payable. Also called net worth of the business or capital. Revenues increase assets and owner's equity. Expenses-Created as a result of efforts made to produce revenues. Expenses either decrease assets or increase liabilities.
Expenses also decrease owner's equity.
If revenues are larger than expenses, the business has a net income. If revenues are smaller than expenses, the business has a net loss. Fiscal Year-Any accounting period for twelve consecutive months for which business records are kept. Withdrawals or Drawing-Amounts taken from the business by the owner for personal use. Withdrawals reduce assets and reduce owner's equity.