The Accounting Equation

Question 1

A tangible or intangible resource that has economic value, owned by a person or organization.

Answer 1

Asset

Question 2

A financial statement that marks a company’s financial situation at a moment in time, showing all assets, liabilities and owners’ equity.

Answer 2

Balance Sheet

Question 3

The person or organization to whom a debt or obligation is owed.

Answer 3

Creditor

Question 4

The financial claims on a company’s assets.

Answer 4

Equities

Question 5

A debt or obligation owed to any other person or organization.

Answer 5

Liability

Question 6

When money is given to an individual or business in exchange for future repayment of the principal amount plus interest.

Answer 6

Loan

Question 7

The difference between an individual’s assets and liabilities.

Answer 7

Net Worth

Question 8

A statement that shows the relationship between an individual’s assets, liabilities, and equity.

Answer 8

Net Worth Statement

Question 9

The owner’s rights to the assets of a business after all liabilities have been paid.

Answer 9

Owners’ Equity

Question 10

The equation showing the relationship between assets, liabilities, and owner’s equity of a company, shown as: Assets = Liabilities + Owners’ Equity

Answer 10

The Accounting Equation