Assets are NOT resources owned by or owed to the business.

• TRUE

• FALSE

What are the two categories of assets?

• Financial Assets

• Current Assets

• Physical Assets

• Non-Current Assets

Classify the following assets under the heading of current assets for a sole proprietor:

• Cash in Hand

• Vehicle

• Inventory

• Accounts Receivables

• Machinery

Liabilities are debts of the business.

• True

• False

What are the two categories of liabilities?

• Physical Liabilities

• Long-term Liabilities

• Current Liabilities

• Changing Liabilities

Classify the following liabilities under the heading Long-term liabilities:

• Mortage

• Telephone bill due next month

• 10 year Loan

• Creditors

• Last 6 months of a three year loan

What is Capital (Owner's Equity)?

The elements of the accounting equations are

• capital.

• assets

• liabilities

• Transactions

The accounting equation can be expressed as follows:

• Assets = Liabilities - Capital

• Assets = Liabilities + Capital

• Capital = Asset + Liabilities

• Capital = Assets - Liabilites

• Liabilities = Assets - Capital

What is another name for creditor?