Unit 6 — The Accounting Equation

This unit discusses the vitally important accounting equation: Assets = Liabilities + Owner's Equity + Revenue - Expenses - Draws. 

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Vocabulary Builder Activity

Students will learn the following key terms and phrases:

Accounting equation Capital Contingent liabilities Current assets Draws Goodwill Income statement Incur Intangible asset Intellectual property Quantify Shareholder equity Sole proprietorship Terminology
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Reading Activity: The Accounting Equation

Improve your reading comprehension and vocabulary in context with our interactive reader.

Financial accounting is an area which can be explained simply by using the accounting equation, which is assets = liabilities + capital. But what does that really mean? To understand the significance of the equation, first we must explore the meaning of the three words; assets, liabilities and capital. These terms are often used in accounting but can have very different meanings. In general…
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Reading Comprehension Quiz

Test your understanding of the reading material with a quick comprehension quiz.

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Multiple Choice Activity

Students will be able to select the best match between unit terms and their definitions.

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Listening Comprehension Activity

Students will be able to listen to short audio clips in English and then spell them correctly.

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Spelling and Recognition

Students will be able to identify and spell a vocabulary term correctly given only the definition.

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Speaking Practice Activity

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There is some very complicated terminology in accounting so you should make sure you have a good dictionary.
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Many people choose to form a sole proprietorship as it is the simplest form of business entity.
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The board of management was delighted with the 15% rise in shareholder equity on the past year.
... and more sentences to practice.
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Writing Practice Activity

Improve your formal and informal writing skills with guided essay questions and professional correction.

  • Why might intangible assets be hard to quantify?
  • Why is the accounting equation so important?
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