equality

(noun)

The fact of being equal; of having the same value.

Related Terms

Examples of equality in the following topics:

  • Fundamental Accounting Equation

    • To ensure that a company is "in balance," its assets must always equal its liabilities plus its owners' equity.
    • Every transaction and all financial reports must have the total debits equal to the total credits.
    • As you can see, the total amount of the debits (the amount on the left) equal the credits (the total amount on the right).
    • The total assets listed on a company's balance sheet must equal the company's total liabilities, plus its owners' equity in the company.
    • As you can see, the business's total assets equal the company's total liabilities and equity.

  • Bonds Issued at Par Value

    • The journal entry would be: Cash $1,000 Bond Payable $1,000The interest payable for each period will be equal to 1,000 x 7%, or $70.
    • It is created by recording a credit equal to the face value of all the bonds that are issued.
    • To balance this entry, the company must also debit cash equal to the face value of all the bonds issued.
    • Since the bonds are sold at par value, the amount of cash the company receives should equal the total face value of the issued bonds.
    • To balance the entry, the company must record a debit equal to the amount it paid in its bond interest expense account.

  • Methods of Depreciation

    • To apply the straight-line method, a company charges an equal amount of the asset's cost to each accounting period.
    • The sum of the digits can be determined by using the formula (n2+n)/2, where n is equal to the useful life of the asset.
    • First, calculate the depreciation rate by adding the years of useful life, or 1+2+3+4+5 (equal to 15).
    • Since the asset has 5 years useful life, the straight-line depreciation rate equals (100% / 5) or 20% per year.
    • At the point where book value is equal to the salvage value, no more depreciation is taken.

  • The Trial Balance

    • A trial balance is run during the accounting cycle to test whether the debits equal the credits.
    • The trial balance tests the equality of a company's debits and credits.
    • If the total of the debit column does not equal the total value of the credit column then this would show that there is an error in the nominal ledger accounts.
    • If debits do not equal credits then the accountant or bookkeeper must determine why.
    • The post-closing trial balance proves debits still equal credits after the closing entries have been made.

  • Goodwill

    • Goodwill is an intangible asset that equals an acquired company's purchase price minus the value of its net assets when it was acquired.
    • In short, goodwill equals the acquisition price minus net assets.
    • The acquired business' assets would be equal to 50 million, and the acquiring business would record 50 million worth of goodwill on its balance sheet.
    • This meant that the value of goodwill was decreased annually, with the business recording a loss equal to the amount of the decrease in value.
    • Goodwill must be decreased so that the segment's carrying value equals the present value of its revenues.

  • Bond Valuation Method

    • The value of the liability the business will record must equal the amount of money or goods it receives when it issues the bond.
    • Whether the amount the business will receive equals its face value depends on the difference between the bond's contract rate and the market rate of interest at the time the bond is issued .
    • Regardless of what the contract and market rates are, the business must always report a bond payable liability equal to the face value of the bonds issued.

  • Bonds Issued at a Premium

    • This would make the amortization rate of the bond's premium equal to $1,000 per year.
    • The company must pay $6,000 in interest annually, so the company's annual interest expense equals $5,000.
    • This would make the amortization rate of the bond's premium equal to $1,000 per year.
    • The company must pay $6,000 in interest annually, so the company's annual interest expense equals $5,000.
    • When all the final journal entries are made, the bond premium and bond payable account must equal zero.

  • Valuing Zero-Coupon Bonds

    • The value of a zero-coupon bond equals the present value of its face value discounted by the bond's contract rate.
    • The proceeds will be the present value of $100,000 at 7% for 3 years: $\frac { 100,000 }{ { 1.07 }^{ 3 } }$ which is equal to $81,629.79.
    • The amount the company pays at the end of the term equals the bond's face value.
    • This equals 1.1025.

  • Redeeming at Maturity

    • The carrying value of bonds at maturity will always equal their par value.
    • For a bond sold at discount, its carrying value will increase and equal their par value at maturity.
    • For a bond sold at premium, its carrying value will decrease and equal the par value at maturity.

  • Reconciling Cash Accounts and Bank Statements

    • A bank reconciliation is an internal control that ensures that the cash in its accounts equals what it has recorded in its books.
    • The reconciliation is not complete until the adjusted column equals the unadjusted column.