Fundamental Accounting Principles
Fundamental Accounting Principles
23rd Edition
ISBN: 9781259536359
Author: John J Wild, Ken Shaw Accounting Professor, Barbara Chiappetta Fundamental Accounting Principles
Publisher: McGraw-Hill Education
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Chapter 2, Problem 14DQ
To determine

Concept Introduction:

1) Assets– It means what is owned by the business. The assets may be fixed assets or current assets. The current assets are those which can be easily converted into cash. All assets other than current assets are fixed assets. The fixed assets increase the earning capacity of the business.

2) Liability– It means what the business owes to the outside world. These are the claims against the assets of the company. The liabilities are of two types – long term liabilities and current liabilities. The current liabilities are those which are to be repaid within one year. The long term liabilities are those which are more than a year.

3) Equity– It means owner equity, which may be in form of share capital, retained earnings and surplus.

4) Net Assets – It means excess of total assets over liabilities.

Requirement -1- To define:

Assets, liabilities, Equity and net assets

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Fundamental Accounting Principles

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