Elements of Financial Statements and the Accounting Equation Flashcards
1
Q
What are assets
A
Resources owned or controlled by a business that are expected to provider future benefits
2
Q
What are liabilities
A
Obligations owed by the business that are expected to be settled in the future
3
Q
What is equity
A
Claim by the owner(s) on the net assets of a business
4
Q
What is income
A
Amounts earned from the activities of a business
5
Q
What is expenses
A
Costs incurred to earn income in the same accounting period
6
Q
Basic accounting equation
A
A = L + OE
Total Assets = Total Liabilities + Total Equity
7
Q
Expanded accounting equation
A
A = L + I + C - E - D
Assets = Liabilities + Income + Capital - Expenses - Drawings
