Osborne exam 2 queston on relationship of assets liablities and equity

reddwarf

Q In which financial statement are assets, liabilities and equity show?
A In the Statement of Financial Postion

Q How are they related to each other in that statement?

Osborne A: Assets-Liabilities = Equity

My A: Assets = Equity and Liabilities

Surely the new layout whilst not reflecting the 'conventional' accounting equation should have been the answer here? They didn't ask 'what is the accounting equation'.

Rinske

Could it be your book is just out of date?

According to the framework, the definition of equity is the residual interest in the assets of the company, after all liabilities have been deducted. (Not the exact words, can't remember those).
Based on that the conventional accounting equation still stands, however I agree with you, as it is to do with the statement and not been asked about the framework definition.

sdv

reddwarf wrote: »

Q In which financial statement are assets, liabilities and equity show?
A In the Statement of Financial Postion

Q How are they related to each other in that statement?

Osborne A: Assets-Liabilities = Equity

My A: Assets = Equity and Liabilities

Surely the new layout whilst not reflecting the 'conventional' accounting equation should have been the answer here? They didn't ask 'what is the accounting equation'.

Your answer is correct for DFS exam purposes from and including June 2010 exam sittings