chp3

Question 1

what is assets

Answer 1

Resources a business owns and control that are expected to provide future benefits
simpler terms: what you own

Question 2

examples of assets?

Answer 2

Property/premises, motor vehicles, office equipment, fixtures and fittings, inventory, cash in hand, cash at bank, trade receivables

Question 3

what is liability?

Answer 3

Obligations owned by a business to other that are expected to be settled in the future
simpler terms: what you can use but MUST pay back

Question 4

Examples of liability?

Answer 4

Bank loan, bank overdraft, mortgage loan, loan from C(lenders name), trade payables

Question 5

what is equity?

Answer 5

Claim by the owner on the net assets of a business
*net assets(equity)= asset- liabilities
simpler terms: wonder claim net assets of a business

Question 6

examples of equity?

Answer 6

capital, profit, drawings
*capital + profit - drawings = owner’s claim

Question 7

What is capital

Answer 7

Resources contributed by the owner for business use

Question 8

What is profit

Answer 8

difference between the income earned and the expenses incurred

Question 9

What is drawings

Answer 9

Assets taken from a business for the owner’s personal use

Question 10

What is mortgage loan

Answer 10

Money borrowed using collateral

Question 11

state the accounting equations for assets

Answer 11

assets= liabilities + equity
Assets of the business are obtained using contributions from the owner or borrowings from others