Chpt 3

Question 1

Define assets

Answer 1

Assets are resources a business owns or controls that are expected to provide future benefits.

Question 2

Define assets

Answer 2

Assets are resources a business owns or controls that are expected to provide future benefits.

Question 3

Define liabilities

Answer 3

Liabilities are debts owed by a business to others that are expected to be repaid or settled in the future.

Question 4

Define equity

Answer 4

Equity refers to the claim by the owner on the net assets (total assets − total liabilities) of a business.

Question 5

Sole proprietorship and private limited company

Answer 5

Sole
Owner’s equity = Capital + Profit ( − Loss) − Drawings

PLC
Shareholders equity = Share capital + Retained earnings

Question 6

Sole proprietorship and private limited company

Answer 6

Sole
Owner’s equity = Capital + Profit ( − Loss) − Drawings

PLC
Shareholders equity = Share capital + Retained earnings

Question 7

Define income

Answer 7

Income refers to amounts earned through the activities of a business.

Question 8

Define expenses

Answer 8

Expenses are costs incurred in the operation of a business to earn income in the same accounting period.

Question 9

Basic accounting equation

Answer 9

Assets = Equity + Liabilities