Chapter 3.4

Question 1

Define equity.

Answer 1

Is the investments that a owner contributes into their business. An example of this would be assets like computers and chairs.

Question 2

Define debt.

Answer 2

It is money that is owed to someone. An example of this would be owing money to the bank to pay off your mortgage.

Question 3

Advantages and disadvantages for owners equity.

Answer 3

Advantage- no repayment to bank, cheaper and don’t need to worry to pay.

Disadvantages- harder to get money, might get lower in return from the small business.