Unit 3 Acc Chapter 02 Glossary

Question 0

Balance sheet

Answer 0

An accounting report that details the business’s assets,liabilities & owner’s equity at a particular point in time.

Question 1

Accounting equation

Answer 1

The rule that states assets must always equal liabilities & owner’s equity.

A= L+OE

Question 2

Classification

Answer 2

Grouping together items that have some common characteristics

Question 3

Current assets

Answer 3

A resource controlled by the entity, from which future economic benefit is expected to flow into the entities in next 12 months.

Question 4

Non current assets

Answer 4

A resource controlled by the entity, from which future economic benefit is expected to flow to the entity for more than 12 months?

Question 5

Current liability

Answer 5

A present obligation of the entity, which is expected to result in an outflow of economic benefit in next 12 months.

Question 6

Non current liability

Answer 6

A present obligation of the entity which is expected to result in an outflow of economic benefits in more than 12 months.

Question 7

Double entry accounting

Answer 7

A system that records 2 effects on the accounting equTion as a result of each transaction.