Lesson 3

Question 1

The accounting Equation

Answer 1

Assets = liabilities + Equity

Question 2

are the economic resources you** control** that have resulted from past events and can provide you with economic benefits.

Answer 2

ASSETS

Question 3

are your** present obligations** that have resulted from past events and can require you to** give up economic resources** when settling them.

Answer 3

LIABILITIES

Question 4

is assets minus liabilities.

Answer 4

EQUITY

Question 5

The Expanded Accounting Equation

Answer 5

Assets = Liabilities + Equity + Income - Expenses

Question 6

is increases in economic benefits during the period in the form of increases in assets, or decreases in liabilities, that result in increases in equity, excluding those relating to investments by the business owner.

Answer 6

INCOME

Question 7

are decreases in economic benefits during the period in the form of decreases in assets, or increases in liabilities, that result in decreases in equity, excluding those relating to distributions to the business owner.

Answer 7

EXPENSES

Question 8

The difference between income and expenses represents

Answer 8

profit or loss.