1. What is the definition of accounting?
Accounting is the process of recording, summarizing, analyzing, and reporting financial transactions of a business or organization.
2. What is an asset in accounting?
- An asset is a resource owned by a company that has economic value and can be used to generate future economic benefits.
3. What is a liability in accounting?
- A liability is a company's legal debts or obligations that arise during the course of business operations.
4. What is equity in accounting?
- Equity represents the owner's claim on assets after all liabilities have been deducted. It is also known as the net assets or net worth of a company.
5. What is revenue in accounting?
- Revenue is the income earned by a company from its normal business activities, such as sales of goods or services.
6. What is an expense in accounting?
- An expense is the cost incurred by a company to generate revenue. It includes items such as salaries, rent, utilities, and supplies.
7. What is a balance sheet in accounting?
- A balance sheet is a financial statement that shows a company's assets, liabilities, and equity at a specific point in time. It provides a snapshot of a company's financial position.
8. What is income statement in accounting?
- An income statement, also known as a profit and loss statement, is a financial statement that shows a company's revenues, expenses, and net income over a specific period of time, such as a quarter or a year.
9. What is the accounting equation?
- The accounting equation is Assets = Liabilities + Equity. It represents the relationship between a company's assets, liabilities, and equity, and must always balance.