Test 1

• Assets are resources owned by the company.
• Liabilities are present obligations of the company.
• Equity is also called as net assets.
• Accounting equation is also termed as balance sheet equation.
• Assets less liabilities are also net assets.


  Assets - Liabilities = Equity
• Service companies provide business in exchange for a professional fee or service revenue.
• Current Assets less Current Liabilities is equals to Equity. THIS IS WRONG


  It should be Equity = Total Assets – Total Liabilities.
• Patents are considered as NON-CURRENT ASSETS
• Accrued expenses are considered as CURRENT LIABILITIES
• FOLIO

  It is a reference used to easily trace the movements of accounts in the general journal and for posting purposes.
• debit means increase for asset and expense accounts
• credit means increase to liability, equity, and revenue accounts
• Account Code

  It is a reference used to easily transfer or locate account titles from journal to ledger.
• Balance sheet is also termed as  Statement of Financial Position
• It is the final output created during the accounting cycle for the use of management

  Financial statement
• Income and Expenses can be found in what component in financial statement? Income Statement