Lecture 2 Flashcards
1
Q
What is the definition of a liability?
A
Obligation to be settled by future payment of cash, goods or services
2
Q
True or false: accrued expenses are an example of a liability
A
True
3
Q
What are the three conditions a liability must meet?
A
- Obligation to deliver in the future
- Result of a past transaction
- Value can be measured with reasonable precision
4
Q
What are the two types of equity?
A
- Contributed / share capital
- Retained profit
5
Q
What is the accounting equation?
A
assets + expenses = equity + revenue + liabilities
6
Q
In double-entry bookkeeping, what is an increase in assets?
A
Debit
7
Q
In double-entry bookkeeping, what is an increase in equity or liabilities?
A
Credit
