Chapter 1, Problem 7BTN

To determine

Accounting Equation:

The assets, liabilities and equity relation, are known as the accounting equation. Assets are the resources of company and that increase as business expand whereas liabilities are the burden on company that has to pay in future; Equity means the owner claim on assets. An accounting equation represent the assets of the company are equal to the liabilities and equity of the company.

In can be represented as follow,

$\text{Assets}=\text{Liabilities}+\text{Equity}$

Assets:

Assets are the resources that a company needs to run the business. An asset is economic resources of the company.

Liabilities:

Liabilities are generally the amount owned by the company from lenders, suppliers, or bank. Liabilities are the burden on the company that they have to pay to others.

Return on Assets:

The return on assets is the return earned on the amount invested in assets. The return on assets is also known as the return on investment. In getting income individual or company will invest money; the ultimate aim is to earn a good return on the amount invested.

1.

a.

To compute: The total amount of liabilities plus equity of A Company.

To determine

b.

To identify: The total amount of asset invested in A Company.

2.

To determine

To compute: Return on asset of A Company and compare the result with competitors.