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Mastering Accounting Concepts

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Questions and Answers

Which of the following is the definition of liabilities?

Increases in economic benefits during the period in the form of inflows or enhancements of assets or decreases of liabilities that result in increases in equity

Decreases in economic benefits during the period in the form of outflows or depletions of assets or increases of liabilities that result in the decrease in equity

Present obligations that have resulted from past events and can require you to give up resources when settling them (correct)

Assets minus liabilities

What is the expanded accounting equation?

Income = Expenses

Assets = Liabilities + Equity

Assets = Liabilities + Equity + Income - Expenses (correct)

Equity = Assets - Liabilities

Which of the following is another term for equity?

Liabilities

Income

Expenses

Capital (correct)

What is the definition of income in accounting?

<p>Increases in economic benefits during the period in the form of inflows or enhancements of assets or decreases of liabilities that result in increases in equity, excluding those relating to distributions to the business owners</p> Signup and view all the answers

What is the definition of expenses in accounting?

<p>Decreases in economic benefits during the period in the form of outflows or depletions of assets or increases of liabilities that result in the decrease in equity, excluding those relating to the business owners</p> Signup and view all the answers

Study Notes

Accounting Basics

Liabilities are debts or obligations that a business owes to others, such as loans or accounts payable.

Accounting Equation

The expanded accounting equation is: Assets = Liabilities + Equity.

Equity

Another term for equity is net worth or owner's equity, which represents the ownership interest in a business.

Income

Income in accounting refers to the revenues earned by a business from its normal operations, such as sales of goods or services.

Expenses

Expenses in accounting are the costs incurred by a business to generate revenues, such as salaries, rent, and supplies.

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Description

Test your knowledge of accounting concepts with this quiz on liabilities, equity, and the expanded accounting equation. Learn about the different terms associated with equity and understand how income and expenses affect the equation. Challenge yourself with questions on assets, liabilities, and equity calculations.