Essentials on financial background

Question 1

the paradox of the missing peseta

Answer 1

1. 3 friends go to a hotel, rend a room for 30 euros (10 each)
2. hotel manager realizes and gives 5 back to bellboy to return to the boys
3. bell boy keeps 2 give each friend 1 euro
4. so, guest pays 3 x 9 = 27 plus 2 - 29. ???

–> no reason to add the extra 2, because it’s already included in the price. it is 3 x 9 in total

Question 2

definition assets (activa)

Answer 2

= economic resources that are expected to provide benefits to a business
1. provide future probable economic benefits (machine helps you make product)
2. you’re the one in control of the entity (allowed to use the machine as you want)
3. it’s results of a prior event/transaction (you buying/making the machine)
- tangible: physical
- intangible: lack of physical substance (patent/copyright)

Question 3

liabilities (verplichtingen)

Answer 3

= amount you still need to pay others
- debitor: individual with legal obligation to pay money
- creditor: individual with legal right to get money

Question 4

equity (eigen vermogen)

Answer 4

= net value of a company
- if represented in shares –> shareholders/stockholders’ equity

Question 5

how does the debit/credit balance look like for A, L, E?

Answer 5

Debit (yours): Credit (not yours):

assets + assets -
liabilities - liabilities +
equity - equity +

Question 6

how does a balance end?

Answer 6

credits > debits –> creditor ending balance
credits < debits –> debtor ending balance