HBS Financial Accounting Module 1: The
Accounting Equation Study Guide Test.
Basic Accounting Equation - CORRECT ANSWER Assets = Liabilities + Owner's Equity
Which FI Doc Can you find the Basic Accounting Equation? - CORRECT ANSWER The Balance Sheet
What is an Asset? - CORRECT ANSWER Cash, Equipment, inventory, other sources owned by a business
that will generate wealth
What are the criteria to be considered an asset? - CORRECT ANSWER - Be purchased at a measurable
cost
- Produce probable economic benefit
- Result from a past event (or transaction)
- Be owned or controlled by the entity
What are Liabilities? - CORRECT ANSWER How businesses accursed is assets, borrowing, credit, Loans,
accounts payable, wages payable.
Criteria to be considered a liability - CORRECT ANSWER - Must impose probable economic obligation on
economic resources in the future
- The obligation has to be to another entity
- The event that created the obligation must be
Owner's Equity - CORRECT ANSWER "The residual interest in the assets of an entity that remains after
deducting the liabilities" SE = A-L
How do payments to owners differ from payments for liabilities to other entities? - CORRECT ANSWER -
Owners make decisions in the business
Accounting Equation Study Guide Test.
Basic Accounting Equation - CORRECT ANSWER Assets = Liabilities + Owner's Equity
Which FI Doc Can you find the Basic Accounting Equation? - CORRECT ANSWER The Balance Sheet
What is an Asset? - CORRECT ANSWER Cash, Equipment, inventory, other sources owned by a business
that will generate wealth
What are the criteria to be considered an asset? - CORRECT ANSWER - Be purchased at a measurable
cost
- Produce probable economic benefit
- Result from a past event (or transaction)
- Be owned or controlled by the entity
What are Liabilities? - CORRECT ANSWER How businesses accursed is assets, borrowing, credit, Loans,
accounts payable, wages payable.
Criteria to be considered a liability - CORRECT ANSWER - Must impose probable economic obligation on
economic resources in the future
- The obligation has to be to another entity
- The event that created the obligation must be
Owner's Equity - CORRECT ANSWER "The residual interest in the assets of an entity that remains after
deducting the liabilities" SE = A-L
How do payments to owners differ from payments for liabilities to other entities? - CORRECT ANSWER -
Owners make decisions in the business
