A100 IU Midterm Test Questions All Answered Correct Updated.

balance sheet equation - Answer assets = liabilities + equity Assets - Answer what the business owns Assets Rules - Answer 1.) Things the business controls 2.) From a past event 3.) Will generate future economic benefit current assets - Answer assets that will be turned into cash or used up within a year ex. cash, accounts receivable, prepayments long term assets - Answer assets that will be turned into cash or used up within a period longer than a year ex. PPE, trucks Liabilities - Answer What the business owes to others (debts) liabilities rules - Answer 1.) Present obligation 2.) Based on past events 3.) Leading to an outflow of money current liabilities - Answer liability that must be settled within a year ex. accounts payable, salaries payable long term liabilities - Answer liabilities that need not be settled for at least a year ex. bonds, other long term debt equity - Answer what's left for the owners from the assets once all the liabilities have been paid off (what the business owns outright) accounts receivable - Answer current asset: if you made a sale but your customers have not yet paid you