Topic 3: The Accounting Equation Flashcards
1
Q
What is the Accounting Equation?
A
Resources owned = Resources Supplied
Hence,
Assets = Liabilities + Equity
2
Q
What are Assets?
A
Resources owned by the business
3
Q
What are Liabilities?
A
Claims by creditors for resources supplied
4
Q
What is Equity?
A
Claims by owners for resources supplied
5
Q
What is Share Capital?
A
Amount Invested by owners (shareholders) of the business
6
Q
What is a Credit Transaction?
A
A Credit Transaction is one in which goods are purchased or sold without the use of money
7
Q
What is a Cash Transaction?
A
A Cash Transaction involves immediate payment in cash or by cheque
