BAF3M Module 1 act 1

Lee Tze Saw
Module 1 Activity 1
Q1. What is meant by financial position?
Financial Position also call balance sheet which involve asset, liabilities and personal
equity. The calculation of financial position is
Total Value of Item one’s owned - Total debt = Personal Net worth
Q2. Define asset and give an example.
Asset is a certain thing that have its own value that own by a person or business. For
instance, furniture and office appliance.
Q3. A)Define liability and give an example.
Liability is a debt that you owed a bank or a person, like bank loan and personal
B) Define owner’s equity
Owner’s equity means a person net worth.
Q4. What is the balance sheet equation?
Balance sheet equation forms the basis of double entry accounting, with a formula of
Asset= liabilities + personal equity
Q5. What is a balance sheet?
Balance sheet is a sheet that involve asset, liabilities and personal equity with
specific date.
Q6. Why did Rick Millar decide to go into business for himself? What risk did
he take?
The reason he decide to go business because he is very interest in sport and he has
knowledge in business as he is degree graduates with athletics background. Rick
Millar take a rick by using “Goldman’s Gym” name to open his gym centre in Niagara
Region though he doesn't know how the outcome would be, plus need to pay for
monthly fees to Goldman as using their name.
Q7. How is the owner’s equity calculated?
Total assets deduct total liabilities.
Q8. In what order are assets listed on the balance sheet?
Assets that last shorter can be convert to cash will be listed first then follow by things
that last for longer or used for long time in business. For example:
Account receivable ( from customers)
Office supplies
Q9. In what order liabilities listed on the balance sheet?
Liabilities listed according to date, the maturity date list first then follow by longest
term. Example:
Account payable
Bank loan
Mortgage loan
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