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    Defining Basic Accounting Terminology

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    Define the following:
    a) asset
    b) current asset
    c) liability
    d) current liability
    e) contributed capital
    f) retained earnings

    Question 4:
    What is the basic accounting equation?

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    Solution Preview

    a) asset - things the business owns. For example, building, equipment.

    b) current asset - the word current in accounting means 12 months, so current assets are those that will change their form during the next year. Current assets include money in the bank, debtors (the sales to customers on credit, but unpaid) and inventory (the stock of goods bought ...

    Solution Summary

    This solution provides the definitions for the given basic accounting terms. Additionally, it provides the basic accounting equation.