Module 2 - Module 2 Introducing Financial Statements and Transaction Analysis DISCUSSION QUESTIONS Q2-1 An asset represents resources a company owns or

Module 2 - Module 2 Introducing Financial Statements and...

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© Cambridge Business Publishers, 2015 Solutions Manual, Module 2 2-1 Module 2 Introducing Financial Statements and Transaction Analysis DISCUSSION QUESTIONS Q2-1.An asset represents resources a company owns or controls. Assets are expected to provide future economic benefits. Assets arise from past events or transactions. A liability is an obligation that will require a future economic sacrifice. Equity is the difference between assets and liabilities. It represents the claims of the company’s owners to its income and assets. The following are some examples of each: Assets Cash Receivables Inventories Plant, property and equipment (PPE) Liabilities Accounts payable Accrued liabilities Deferred revenue Notes payable Long-term debt Equity Contributed capital (common and preferred stock) Additional paid-in capital Retained earnings Accumulated other comprehensive income Treasury stock