Accounting Equation

Question 1

What is capital?

Answer 1

Resources added to company by the owner

Question 2

What is an asset?

Answer 2

Resources within business

Question 3

What is a liability?

Answer 3

Amounts owing people for assets

Question 4

In the accounting equation Capital = ?

Answer 4

Capital = asset - liability

Question 5

What is the double entry System?

Answer 5

Reflects the double impact of each transaction

Question 6

The left hand side of a double entry reflects?

Answer 6

Debit

Question 7

The right hand side of a double entry reflects?

Answer 7

Credit entry

Question 8

What effect does a decrease and increase in assets have on the account?

Answer 8

An increase in assets = debit entry
A decrease in assets = credit entry

Question 9

What effect does an increase and a decrease in liability have on an account?

Answer 9

Increase = credit
Decrease = debit

Question 10

What effect does a increase and decrease in capital have on an account

Answer 10

Increase = credit
Decrease = debit