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Business Mathematics Chapter 1, Sections 1-6: Assets, Liabilities, and Capital

Business Mathematics Chapter 1: Stewardship
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Terms to Know:
Section 1: Keeping Money Records
  • Accounting (Bookkeeping) is the keeping of money records.
Addition Process
  • Adding is the arithmetic process of combining numbers to reach a total.
  • The numbers combined are called addends, and the total of the addends combined is called the sum.
  • When doing addition with decimals, always keep the decimal points aligned.
Section 2: Cash Receipts and Payment Records
  • Cash receipt records and cash payment records are two money records that can help families and individuals avoid financial problems.
  • A deficit occurs when you have more payments than receipts.
  • An excess occurs when you have more receipts than payments.
Subtraction Process
  • In subtraction, the number being decreased is the minuend, the amount of reduction is the subtrahend, and the remaining amount is the difference.
Section 3: Assets
  • An asset is a property that has any worth to your business.
  • When customers owe your business money, the amount is records as accounts receivable.
Multiplication Process
  • Multiplication is the arithmetic process of adding one number (the multiplicand) to itself as many times as there are units in another number.
  • The multiplicand being multiplied is the multiplier. Your answer is the product.
  • Both the multiplicand and the multiplier can be referred to as a factor.
  • To round of decimals, look at the digit to the right of the place being rounded off.
  • If the digit is less than 5, drop it and all digits behind it. If the digit is 5 or more, drop it along with all digits behind it and add 1 to the digit preceding it.
  • To find your total assets, simply find the sum of all your assets.
Section 4: Liabilities
  • The amount you owe to a person is called the liability.
  • When your business owes money to another business, you record the amount as accounts payable.
  • The business or person whom you are liable is the creditor.
Section 5: Captial
  • The capital is the amount of money invested (assets) minus the business liabilities.
  • Assets = Liabilities + Capital
  • Liabilities = Assets - Capital
  • Capital = Assets - Liabilities
Section 6: The Balance Sheet
  • A balance sheet is a statement of financial condition which shows the business's assets, liabilities, and capital.
  • When you prepare a balance sheet, list your assets in the left column, your liabilities in the right column, and your capital in the right column, also.

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