Chap 3 Quiz Flashcards
What is an Asset?
Resources owned or controlled by the business to carry out its activities
What is an Equity?
Amount contributed by the owner and profit made by the business
What is an Expense?
Incurred by business to generate income
What is an Income?
Amount earned from mainly selling goods or providing services
What is a Liability?
Amount owned or controlled by the business to carry out its activities
Explain the difference between inventory and no current assets?
Inventory are goods purchased with the intention of resale
non current assets are purchased with the intention to be used in the business to generate income
Explain the difference between asset and expense?
Benefits obtained from assets will last longer than benefits obtained from expenses for business
Explain the difference between liabilities and equity?
Liabilities are amounts owed by the business to other businesses or people
Equity is the amount contributed by the owners and profit generated by the business
State the accounting equation?
Total assets = Total liability + Total equity
