The Accounting Equation

Which one of the following is an asset?

• Initial investment

• Accounts payable

• Land

• Creditor

A ________ is someone that owes us money (Accounts receivable)

Accounts payable are also known as _________

• Liabilities

• Capital

• Assets

• Equity

Which formula is used when calculating capital? 

• A=L+C

• L=A-C

• C=A+L

• C=A-L

Machinery is a Liability

• True

• False

An _______ is what is owned by a firm

• Asset

• Liability

• Capital

• Equity

Creditors are people/businesses to whom you owe money

• True

• False

What is the purpose of a Statement of Financial Position/Balance sheet?

Loans, accounts payable, creditors, and debentures are all considered __________

• Assets

• Equity

• Liabilities

• Capital

Land, machinery, buildings, fixtures and fittings are all considered_________

• Assets

• Equity

• Liabilities

• Capital