Osborne exam 2 queston on relationship of assets liablities and equity

Options
reddwarf
reddwarf Registered Posts: 528 Epic contributor 🐘
in AAT Level 4 (Level 8 in Scotland)
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'.

Comments

  • Rinske
    Rinske Registered Posts: 2,453 Beyond epic contributor 🧙‍♂️
    Options
    Could it be your book is just out of date?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
    sdv Registered Posts: 585 Epic contributor 🐘
    Options
    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

Categories

Privacy Policy