Asset: It refers to all valuable items that a company owns or items that generate some income to the company whether tangible or intangible. The more assets a company owns, the stable its financial position would be. Accounting rule for assets is, Increase in assets is always debited. Decrease in assets is always credited. Liability: It refers to all items that have some monetary value in market and that company owes from others. The liability is much important for a company for financial support. Accounting rule for liabilities is, Increase in liabilities is always credited. Decrease in assets is always debited. Equity: It refers to the contribution that an owner makes to the company. The more equity the company has, the more profitable the company would be. Accounting rule for equity is, Increase in equity is always credited. Decrease in equity is always debited. Revenue: It refers to the amount related with the incomes that a company earns form its operations and transactions. Accounting rule for revenue is, Increase in revenue should be credited. Decrease in revenue should be debited. Expense Account: It refers to the amount related with the expenditure that a company incurs for its efficient running and operations. Accounting rule for expense account is, Increase in expense should be debited. Decrease in expense should be credited. To identify: Accounts that are either an asset (A), liability (L), equity (EQ), revenue (R) or expense (E) account along with their identification number. a.

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Chapter 2, Problem 3QS

To determine

Asset: It refers to all valuable items that a company owns or items that generate some income to the company whether tangible or intangible. The more assets a company owns, the stable its financial position would be.

Accounting rule for assets is,

Increase in assets is always debited.

Decrease in assets is always credited.

Liability: It refers to all items that have some monetary value in market and that company owes from others. The liability is much important for a company for financial support.

Accounting rule for liabilities is,

Increase in liabilities is always credited.

Decrease in assets is always debited.

Equity: It refers to the contribution that an owner makes to the company. The more equity the company has, the more profitable the company would be.

Accounting rule for equity is,

Increase in equity is always credited.

Decrease in equity is always debited.

Revenue: It refers to the amount related with the incomes that a company earns form its operations and transactions.

Accounting rule for revenue is,

Increase in revenue should be credited.

Decrease in revenue should be debited.

Expense Account: It refers to the amount related with the expenditure that a company incurs for its efficient running and operations.

Accounting rule for expense account is,

Increase in expense should be debited.

Decrease in expense should be credited.

To identify: Accounts that are either an asset (A), liability (L), equity (EQ), revenue (R) or expense (E) account along with their identification number.

a.

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