Lesson 2 - The Accounting Equation

Question 1

The three elements of the accounting equation are…

Answer 1

Assets
Liabilities
Owners Equity

Question 2

T/f - The accounting equation is:
Assets = Liabilities + Owners Equity.

Answer 2

True

Question 3

T/f - The accounting equation is:
Assets + Liabilities = Owners Equity.

Answer 3

False.
The accounting equation is:
Assets = Liabilities + Owners Equity.

Question 4

Who am I?
A present economic resource controlled by the entity (as a result of past events) that has the potential to produce future economic benefit

Answer 4

Asset

Question 5

Who am I?
A present obligation of the entity (as a result of past events) to transfer an economic resource.

Answer 5

Liability

Question 6

Who am I?
The residual interest in the assets of the entity after all its liabilities are deducted.

Answer 6

Owners equity

Question 7

Grouping together items that have similar/common characteristics is referred to as…

Answer 7

Classifying/classification

Question 8

Inventory, Bank, Accounts Receivable, Equipment, Vehicle and Premises are examples of…

Answer 8

Assets

Question 9

Loan, Accounts Payable, Bank Overdraft and Mortgage are examples of…

Answer 9

Liabilities

Question 10

Who am I?
The assumption that the accounting records of asset, liabilities and business activities of the entity are kept completely separate from those of the owner of the entity as well as from those of other entities.

Answer 10

Accounting entity assumption.

Question 11

Current assets =
a) Less than 12 months
b) More than 12 months

Answer 11

a) Less than 12 months.

Question 12

Non Current assets =
a) Less than 12 months
b) More than 12 months

Answer 12

b) More than 12 months