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2.18.3 QuestionsAccounting has often been called the language of business. In what respects would you agree with this description? How might you argue that this description is deficient?Define asset, liability, and stockholders’ equity.Assets is what you ownLiability is what you owedStockholder’s equity is the owner’s interest in a corporationHow do liabilities and stockholders’ equity differ? How are they similar?How do accounts payable and notes payable differ? How are they similar?Define revenues. How are revenues measured?Define expenses. How are expenses measured?What is a balance sheet? On what aspect of a business does the balance sheet provide information?What is an income statement? On what aspect of a business does this statement provide information?What information does the statement of retained earnings provide?Identify the three types of activities shown in a statement of cash flows.What is a transaction? What use does the accountant make of transactions? Why?What is the accounting equation? Why must it always balance?Give an example from your personal life that illustrates your use of accounting information in reaching a decision.You have been elected to the governing board of your church. At the first meeting you attend, mention is made of building a new church. What accounting information would the board need in deciding whether or not to go ahead?A company purchased equipment for USD 2,000 cash. The vendor stated that the equipment was worth USD 2,400. At what amount should the equipment be recorded?What is meant by money measurement?Of what significance is the exchange-price (or cost) concept? How is the cost to acquire an asset determined?What effect does the going-concern (continuity) concept have on the amounts at which long-term assets are carried on the balance sheet?Of what importance is the periodicity (time periods) concept to the preparation of financial statements?Describe a transaction that would:oIncrease both an asset and capital stock. CASH, OWNER INVESTED CASHoIncrease both an asset and a liability. BORROWED MONEY, COMPANY NOTE SIGNEDoIncrease one asset and decrease another asset.oDecrease both a liability and an asset.oIncrease both an asset and retained earnings.oDecrease both an asset and retained earnings. Increase a liability and decrease retained earnings.