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From Wikipedia

Accounting equation

The basic accounting equation' is the foundation for thedouble-entry bookkeeping system. For each transaction, the total debits equal the total credits.

Assets = Liabilities + Capital

In a corporation, capital represents the stockholders' equity.

Bold text'[Italic text] ==How it works== For example: A student buys acomputer for $945. This student borrowed $500 from his best friend and spent another $445 earned from his part-time job. Now his assets are worth $945, liabilities are $500, and equity $445.

The formula can be rewritten:

Assets − Liabilities = (Shareholders or Owners equity or Capital)

Now it shows owner's interest is equal to property (assets) minus debts (liabilities). Since in a company owners are shareholders, owner's interest is called shareholder's equity. Every accountingtransaction affects at least one element of the equation, but always balances. Simplest transactions also include:

These are some simple examples, but even the most complicated transactions can be recorded in a similar way. This equation is behind debits, credits, and journal entries.

This equation is part of the transaction analysis model, for which we also write

Owners equity = Contributed Capital + Retained Earnings
Retained Earnings = Net Income − Dividends


Net Income = Income − Expenses

The equation resulting from making these substitutions in the accounting equation may be referred to as the expanded accounting equation, because it yields the breakdown of the equity component of the equation.

Balance sheet

An elaborate form of this equation is presented in a balance sheet which lists all assets, liabilities, and equity, as well as totals to ensure that it balances.


Luca Pacioli is notable for including the first published description of the method of keeping accounts that Venetianmerchants used during the Italian Renaissance, known as the double-entry accounting system. However, recently some historians and experts feel that this was already being used by the Arabs and Muslim traders with whom the Venetians would have had contact. They argue that even though Luca Pacioli formally introduced it to Europe, the credit should still go to Eastern merchants who had been using it years before. This claim is yet to be accepted by the academic community as it forces a rethink of several other aspects in this field.


A worksheet is a sheet of paper, or on a computer, on which problems are worked out or solved and answers recorded.


Students in a school may have 'fill-in-the-blank' sheets of questions, diagrams, or maps to help them with their exercises. Students will often use worksheets to review what has been taught in class. A worksheet generator is a software program that generates problems, particularly in mathematics or numeracy. Such software is often used by teachers to make classroom materials and tests.


In accounting a worksheet often refers to a loose leaf piece of stationery from a columnar pad, as opposed to one that has been bound into a physical ledger book. From this, the term was extended to designate a single, two-dimensional array of data within a computerized spreadsheet program. Common types of worksheets used in business include financial statements, such as profit and loss reports. Analysts, investors, and accountants track a company's financial statements, balance sheets, and other data on worksheets.

In the Microsoft spreadsheet program Excel, a single document is known as a 'workbook' and by default each workbook contains three arrays or 'worksheets'. One advantage of such programs is that they can contain formulae so that if one cell value is changed, the entire document is automatically updated, based on those formulae.


A spreadsheet is a computer application that simulates a paper, accounting worksheet. It displays multiple cells that together make up a grid consisting of rows and columns, each cell containing alphanumeric text, numeric values or formulas. A formula defines how the content of that cell is to be calculated from the contents of any other cell (or combination of cells) each time any cell is updated. Spreadsheets are frequently used for financial information because of their ability to re-calculate the entire sheet automatically after a change to a single cell is made.

Visicalc is usually considered the first electronic spreadsheet (although this has been challenged), and it helped turn the Apple II computer into a success and greatly assisted in their widespread application. Lotus 1-2-3 was the leading spreadsheet when DOS was the dominant operating system. Excel now has the largest market share on the Windows and Macintosh platforms.


Paper spreadsheets

The word "spreadsheet" came from "spread" in its sense of a newspaper or magazine item (text and/or graphics) that covers two facing pages, extending across the center fold and treating the two pages as one large one. The compound word "spread-sheet" came to mean the format used to present book-keeping ledgers—with columns for categories of expenditures across the top, invoices listed down the left margin, and the amount of each payment in the cell where its row and column intersect—which were, traditionally, a "spread" across facing pages of a bound ledger (book for keeping accounting records) or on oversized sheets of paper ruled into rows and columns in that format and approximately twice as wide as ordinary paper.

Early implementations

Batch spreadsheet report generators

A batch 'spreadsheet' is indistinguishable from a batch compiler with added input data, producing an output report (i.e. a 4GL or conventional, non-interactive, batch computer program). However, this concept of an electronic spreadsheet was outlined in the 1961 paper "Budgeting Models and System Simulation" by Richard Mattessich. The subsequent work by Mattessich (1964a, Chpt. 9, Accounting and Analytical Methods) and its companion volume, Mattessich (1964b, Simulation of the Firm through a Budget Computer Program) applied computerized spreadsheets to accounting and budgeting systems (on mainframe computers programmed in FORTRAN IV). These batch Spreadsheets dealt primarily with the addition or subtraction of entire columns or rows (of input variables) - rather than individual 'cells'.

In 1962 this 'concept' of the spreadsheet (called BCL for Business Computer Language) was implemented on an IBM 1130 and in 1963 was ported to an IBM 7040 by R. Brian Walsh at Marquette University, Wisconsin. This program was written in Fortran. Primitive timesharing was available on those machines. In 1968 BCL was ported by Walsh to the IBM 360/67 timesharing machine at Washington State University. It was used to assist in the teaching of finance to business students. Students were able to take information prepared by the professor and manipulate it to represent it and show ratios etc. In 1964, A book entitled Business Computer Language written by Kimball, Stoffells and Walsh and both the book and program were copyrighted in 1966 and years later that copyright was renewed

In the late 60's Xerox used BCL to develop a more sophisticated version for their timesharing system.

LANPAR spreadsheet compiler

Key invention in the development of electronic spreadsheets was made by Rene K. Pardo and Remy Landau, who filed in 1971 on spreadsheet automatic natural order recalculation algorithm in 1970. While the patent was initially rejected by the patent office as being a purely mathematical invention, following 12 years of appeals, Pardo and Landau won a landmark court case at the CCPA (Predecessor Court of the Federal Circuit) overturning the Patent Office in 1983 - establishing that "something does not cease to become patentable merely because the point of novelty is in an algorithm." However, in 1995 the United States Court of Appeals for the Federal Circuit ruled the patent unenforceable.

The actual software was called LANPAR - LANguage for Programming Arrays at Random. This was conceived and entirely developed in the summer of 1969 following Pardo and Landau's recent graduation from Harvard University. Co-inventor Rene Pardo recalls that he felt that one manager at Bell Canada should not have to depend on programmers to program and modify budgeting forms, and he thought of letting users type out forms in any order and having computer calculating results in the right order. The software was developed in 1969.

LANPAR was used by Bell Canada, AT&T and the 18 operating telcos nationwide for their local and national budgeting operations. LANPAR was also used by General Motors. Its uniqueness was the incorporation of natural order recalculation, as opposed to left-to-right, top to bottom sequence for calculating the results in each cell that was used by Visicalc, Supercalc and the first version of Multiplan. Without natural order recalculation the users had to manually recalculate the spreadsheet as many times as necessary until the values in all the cells had stopped changing.

The LANPAR system was implemented on GE400 and Honeywell 6000 online timesharing systems enabling users to program remotely via computer terminals and modems. Data could be entered dynamically either by paper tape, specific file access, on line, or even external data bases. Sophisticated mathematical expressions including logical comparisons and "if/then" statements could be used in any cell, and cells could be presented in any order.

Autoplan/Autotab spreadsheet programming language

In 1968, three former employees from the General Electric computer co

From Yahoo Answers

Question:I'm looking for a list of formulas to hang on my cube wall. The advanced formulas for business such as v look ups, omit 0's and such. If anyone could point me in the right direction that would be helpful Thanks in advance for your help

Answers:There are over 300 built in functions in Excel. Here is a link to an excellent site that has all kinds of good information: http://www.cpearson.com/excel/topic.aspx Any book by John Walkenbach is worth the money spent. He has books on all aspects of Excel, all versions.

Question:ok so my math final is tomorrow and we are allowed a cheat sheet. it can have anything on it. and i need formulas and examples of how to do things. i'm in math 5-6 if that helps any. or 11th grade math in az. anyone have websites where i can print out things or anything? plz help it can be both front and back off a plain white piece of paper. and i don't wanna go into my book and try finding everything. i want a website or something that already has this! haha

Answers:how big can the cheat sheet be? some teachers say only one paper, and index card, etc. just write everything you think you would need to know on it and if you can only use an index card or something small, then write really small.

Question:Here's the deal. We've only had 1 week of school. The teacher assigned us an accounting problem to be done in Excel spreadsheet. I had no problem with this because my 1st accounting class required you to do ALL your work in Excel and it had to be perfect(perfect format, formulas in the appropriate cells etc.) so since I was told that this would be expected of me in any future accounting class, I have used this format for everything. Because of these things I am being told that the work is not mine and that I copied it from the solutions manual. I asked her to tell me what parts of the spreadsheet make her assume that it wasn't my work and she said stuff like the format, and the formulas used in the cells, basically the stuff that was drilled into my head in my first class. I guess she assumes that I wouldnt know how to use Excel and that I wouldn't prepare the spreadsheet professionally because quote "other students did not present the same similarities" I have asked her to show me how she wants me to prepare my spreadsheets in the future to prove that I am working on it, (I spent 4 hours on it for crying out loud) and she will not help. She has set her mind to believe that I am a cheater and that's it. She said that if this is only my basic knowledge of how to prepare a spreadsheet and to get the problems right then this will prove itself on the test. Till then she will make my life hell. The test is a few weeks away. I've offered to come into her office and work my homework in front of her but she refuses. What else am I suppose to do? For those who doubt me, I REALLY do know the formulas, however, the only formula needed and was used was the sum function, example =sum(d8,f8) or subtraction =sum(d8-f8), even a monkey could do it.

Answers:Sounds pretty bad. After all that i'm pretty convinced you didn't cheat. It's kind of understandable that someone thinks you're cheating when they see a perfect assignment. But if you even offer to do the work in front of her, I don't see what the problem is. If it bothers you that much you should probably take up the matter with someone higher up - like the school principal or someone. Or else, just forget it, she's probably jealous of you..take no notice. hmm, and i don't think a monkey could do those Excel functions :)

Question:I already created a adjusted trial balabce, on the next NEW sheet (on the same project) I have to make a multiple-step income statement; I want to know how to link cells from the first sheet to the second, so when i change numbers on the first sheet It will change on the second sheet.

Answers:In your second sheet in A1 type =Sheet1!A1 You can quickly do this by typing = in the cell, then navigating to the source sheet with your mouse, and pressing Enter. You can also do calculations:- =SUM(Sheet1!A1:Sheet1!A20)

From Youtube

Become an Accountant : Creating a Balance Sheet :An accounting balance sheet has three parts to it: assets, liabilities and equity. Learn the basic balance sheet accounting formula of assets equal liabilities plus equity with tips from a certified public account in this free video on accounting. Expert: Shanis Windland Bio: Shanis Windland...

Balance Sheets : What Are the Requirements of Balance Sheet :The requirements of a balance sheet are to follow a formula that illustrates the assets equaling the liabilities and the owner's equity. Outline the assets, liabilities and equity to create a thorough balance sheet withinformation from an accounting professor in this free video on business. Expert: Shawn Jones Contact: www.argosy.edu Bio: Shawn Jones is an accounting professor at Argosy University in Salt Lake City, Utah. Filmmaker: Michael Burton