Financial Accounting Definitions: Asset, Liability, Stockholder's Equity, Revenues, & Expenses
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This video is brought to you by Tony Bell and is part 1 of a 5 part introduction to financial accounting series. In this video, Tony Bell explains and defines key basic accounting terms: Asset, Liability, Stockholder's Equity, Revenue, and Expense. Tony Bell also provides common examples of each term.
For greater understanding of each term please refer to the following definitions and links:
What is an asset?
In financial accounting, an asset is an economic resource. Anything tangible or intangible that is capable of being owned or controlled to produce value and that is held to have positive economic value is considered an asset. Simply stated, assets represent value of ownership that can be converted into cash (although cash itself is also considered an asset)
What is a liability?
In financial accounting, a liability is defined as an obligation of an entity arising from past transactions or events, the settlement of which may result in the transfer or use of assets, provision of services or other yielding of economic benefits in the future.
What is stockholder's equity?
In accounting and finance, equity is the residual claimant or interest of the most junior class of investors in assets, after all liabilities are paid; if liability exceeds assets, negative equity exists. In an accounting context, shareholders' equity (or stockholders' equity, shareholders' funds, shareholders' capital or similar terms) represents the remaining interest in the assets of a company, spread among individual shareholders of common or preferred stock; a negative shareholders' equity is often referred to as a positive shareholders' deficit.
What is a revenue?
In business, revenue or turnover is income that a company receives from its normal business activities, usually from the sale of goods and services to customers.
What is an expense?
In common usage, an expense or expenditure is an outflow of money to another person or group to pay for an item or service, or for a category of costs
From Tony Bell:
Next video in series: https://www.youtube.com/watch?v=rlYrE...
In this video series viewers will learn to prepare and understand basic income statements, balance sheets, and statements of retained earnings.
The first video in the series goes over the definition of Asset, Liability, Shareholders' Equity, Revenues, and Expenses
This video and the attached worksheet were prepared by Tony Bell of Thompson Rivers University - I encourage educators to freely use, edit and modify these videos and the attached worksheet - they are available under Creative Commons Licenses.
Link to Original video:
Accounting - Unit 1 - Part 1 - Definitions
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