Accounting Lesson 4

Business transactions makes up of (1) two parties, (2) _________________ that can be (3) expressed in money

• exchanging items

• exchanging transactions

• exchanging values

• exchanging elements

All transactions are an exchange and the items exchanged will always have an equal value.

• True

• False

The next step in using the Accounting Equation is ______________ how each of the parts in the transaction affect the accounting equation

• summarizing

• classifying

• analyzing

• interpreting

This is a type of resource that a business owns that has value or future benefit.

• Capital

• Liabilities

• Owner's Equity

• Assets

This characteristic of asset pertains to that the economic resources could be later sold, or used to generate income.

• You can control who has access to these benefits.

• The transaction involving the item has already occurred.

• You will be able to get a future benefit from the item.

• The transaction involoving the item has alrady incurred

These are assets to be consumed within a year including accounts receivable, office supplies, cash, and inventory.

• Intangible Assets

• Fixed Assets

• Current Assets

• Contra-Assets

What do you call the assets that lack physical existence like patents, brand, copyrights, trademarks, licenses and permits and corporate intellectual property.

• Current Assets

• Fixed Assets

• Intangible Assets

• Contra-Assets

This includes coins, currencies, checks, bank deposits, and other cash items readily available for use in the operations of the business.

• Prepaid Expenses

• Inventories

• Cash equivalents

• Cash

They include debts, obligation to pay, and claims of the creditors on the assets of the business.

• Prepaid Expenses

• Liabilities

• Legal Obligation

• Contra-Assets

What do you call the liabilities that are due and payable within one year.

• Current Liabilities

• Fixed Liabilities

• Non-current Liabilities

• Active Liabilities