Chapter 1 — Foundations & The Accounting Equation

Two Sides of the Same Coin

Learning Outcome Covered: 1.3a

A coin has two sides. So does a business. One side is the things the business has. The other side is the people who have a claim on them. Read the card, then flip the coin to the side it belongs to. There is no timer — take your time.

🎯 Objective

Learning outcome 1.3a: explain what the accounting equation means — the resources a business has, and the claims other people have on those resources.

Four short rounds: the easy ones → the tricky ones → look-alike pairs → and last, whose claim is it?

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🪙 Two Sides of the Same Coin

A business has things it uses: cash, a van, supplies. These things are called resources. Accountants call them assets.

Nobody gets things for free. Someone paid for every resource, and that person holds a claim on it.

Two kinds of claim

People outside the business — a bank, a supplier, the tax office. Their claim is a liability.
The owner. Whatever is left over is the owner's. That claim is equity.

The same money, counted twice

Count the things the business has. Then count the claims on them. You get the same total. So this is always true:

Assets = Liabilities + Equity

Written short: A = L + E.

Two to watch

Profit kept in the business is a claim, not a pile of cash.
Money a customer still owes you is a thing you have — the right to be paid.

Launch

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Wave 1 — Two Sides of One Coin

Item

Cash in the business bank account

Which side of the coin is this?

Tap a side to flip the coin!

Wave 1

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