Textbook Problem

In accounting, economic resources owned by a company are known as _______, whereas debts or obligations of a company are known as________. (15-1)

To determine

To fill: The blank space provided in the statement, “In accounting, economic resources owned by a company are known as _____, whereas debts or obligations of a company are known as _____”.

Answer to Problem 1CR

Solution:

In accounting, economic resources owned by a company are known as equities, whereas debts or obligations of a company are known as liabilities.

Explanation of Solution

Equities are generally the claim against the resources required at a specific point of time. It is the value of shares that the company has issued. It also displays the book value of a company. They are owned by the people, who can vote at the meetings.

Hence, company’s economic resource are called equities.

Liabilities are the obligation of a business that emerge from the transactions made in past which are not paid. It is of two types, current liabilities which are present in an organization for a short period of time and non-current liabilities which are present in an organization for a long period of time.

Hence, debts or obligations of a company are known as liabilities.

Thus, in accounting, economic resources owned by a company are known as equities, whereas debts or obligations of a company are known as liabilities.