C3 Introducing the Big 3 Financial Statements

Question 1

financial accounting is…?

Answer 1

the process of classifying and recording all events that take place during the normal course of a company’s business

[the process of converting activities into numbers so that the numbers can be analysed and used to execute the activities more effeciently]

Question 2

accounting is based upon a double-entry system: ?

Answer 2

for every action, there must be an equal reaction. These are called debits and credits which net effect is zero and results in balancing the books

Question 3

the fundamental accounting equation

Answer 3

also known as the accounting equation or the balance sheet equation is:

Assets = Liabilities + Equity