Chapter 2, Problem 1DQ

Provide the names of two (a) asset accounts, (b) liability accounts, and (c) equity accounts.

Summary Introduction

Concept Introduction:

Assets are physical as well as intangible resources of the business which are kept forproviding future economic benefits.Liabilities are dues or amount payable by the business. Equity represents the sum of capital and profits/ loss earned by the business owners. Net asset is the amount of assets available after payment of liabilities.  

To indicate: The names of two assets, two liabilities, and two equity accounts.

Explanation of Solution

Assets: Assets are physical as well as intangible resources of the business which are kept providing future economic benefits. The names of two assets accounts are as follows:

• Equipment: Equipment is an asset purchased for production.
• Land: Land is a long term asset.

Summary Introduction

Concept Introduction:

Assets are physical as well as intangible resources of the business which are kept for providing future economic benefits. Liabilities are dues or amount payable by the business. Equity represents the sum of capital and profits/ loss earned by the business owners. Net asset is the amount of assets available after payment of liabilities.  

To indicate: The names of two assets, two liabilities, and two equity accounts.

Explanation of Solution

Liabilities: Liabilities are dues or amount payable by the business. The names of two liabilities accounts are as follows:

• Accounts payable: Accounts payable is a short term liabilities for payment of purchases.
• Long term loan: Long term loan is a long term liability for payment of loan.

Summary Introduction

Concept Introduction:

Assets are physical as well as intangible resources of the business which are kept for providing future economic benefits. Liabilities are dues or amount payable by the business. Equity represents the sum of capital and profits/ loss earned by the business owners. Net asset is the amount of assets available after payment of liabilities.  

To indicate: The names of two assets, two liabilities, and two equity accounts.

Explanation of Solution

Equity: Equity represents the sum of capital and profits/ loss earned by the business owners.

Net assets: A net asset is the amount of assets available after the payment of liabilities.  The names of two equity accounts are as follows:

• Common stock: Common stock represents the amount of investment made by the business owners.
• Retained earnings: Retained earnings represent the accumulated net income of the business.