WEEK 2- Statement Of Financial Position

Question 1

What is the the basic Accounting Equation For Assets?

Answer 1

Assets = Liabilities + Equity

Question 2

What increases equity?

Answer 2

Two things increase equity:
1) Investments by shareholders
2) Revenues

Question 3

What two things decrease equity?

Answer 3

Two things decrease equity:

1) Dividends To Shareholders
2) Expenses

Question 4

What’s the equation for Equity? (Not the equity = Assets - Liabilities

Answer 4

Equity = Share capital (ordinary) + retained earnings

Question 5

What’s the equation for retained earnings?

Answer 5

Retained earnings = revenues - Expenses - Dividends

Question 6

What is double entry bookkeeping?

Answer 6

Each transaction has a dual effect on the accounting equation so that equality of assets and liability is preserved