Question

Consider the following accounting terms and definitions, and match each term to the definition:

1. Accounting equation

2. Asset

3. Balance sheet

4. Expense

5. Income statement

6. Liability

7. Net income

8. Net loss

9. Revenue

10. Statement of cash flows

11. Statement of retained

earnings

a. An economic resource that is expected to be of benefit

in the future

b. Debts that are owed to creditors

c. Excess of total expenses over total revenues

d. Excess of total revenues over total expenses

e. The basic tool of accounting, stated as

Assets = Liabilities + Equity

f. Decreases in equity that occur in the course of selling

goods or services

g. Increases in equity that occur in the course of selling

goods or services

h. Reports on a business’s cash receipts and cash payments

during a period

i. Reports on an entity’s assets, liabilities, and stockholders’

equity as of a specific date

j. Reports on an entity’s revenues, expenses, and net

income or loss for the period

k. Reports how the company’s retained earnings balance

changed from the beginning to the end of the period

Short answer

The correct option is matched as follows:

1	e
2	a
3	i
4	f
5	j
6	b
7	d
8	c
9	g
10	h
11	k

Step-by-step solution

Step-by-Step-SolutionStep 1: Explanation on Accounting Equation

The accounting equation is the general tool of accounting, which measures the resources and their claim.

Explanation on Income Statement

Income statement is the part of the financial statements issued by the entity at the end of the period, which exhibits the revenues and expenses of the business for the period.

Explanation on Statement of Retained Earnings

Statement of retained earnings is the part of the financial statements issued by the entity at the end of the period, which exhibits the change in the beginning balance of retained earnings