Fill in the Blanks: Accounting Equations

In accounting, various equations and principles are used to ensure the accurate recording of financial transactions. Fill in the blanks with the appropriate terms to complete the following accounting equation:

Assets = Liabilities + (Owner's Equity)

Assets: ________ are the resources owned by a company, which may include cash, accounts receivable, inventory, and property.

Liabilities: ________ are the obligations or debts a company owes to external parties, such as loans, accounts payable, and accrued expenses.

Owner's Equity: ________ represents the residual interest in the assets of the entity after deducting liabilities. It includes the initial investments by the owner and any retained earnings.

The fundamental accounting equation, Assets = Liabilities + Owner's Equity, must always balance, meaning that the total assets must equal the total of liabilities and owner's equity.

A common equation to calculate owner's equity is Owner's Equity = Assets - Liabilities, which provides an alternative way to measure the owner's stake in the business.

When a company generates profits, these are typically retained within the business, increasing the owner's equity, and this process is known as ______________.

If a company pays a dividend to its shareholders, it reduces the owner's equity, which is a form of ______________ to the owners.

The accounting equation serves as the foundation for double-entry accounting, where every transaction affects at least two accounts, ensuring that the equation ______________.

Complete the blanks to ensure the accounting equations are correctly represented