Equity and Assets would both decline (Land declines) (Expenses, Utilities Expense in this case, cause Retained Earnings to decrease).
What is Asset?
- Any resource that a company or other economic organization owns or controls is considered an asset in financial accounting.
- Anything that has the potential to provide positive economic value qualifies. Assets indicate ownership value that may be sold for money.
- Three categories are typically used to classify assets:
- Convertibility: The ability to quickly turn one asset into another to generate cash.
- Assets should be categorized according to their physical state.
- Using assets according to their intended use or function in corporate operations.
What is accounting equation?
The accounting equation is a formula that shows the sum of a company's liabilities and shareholder's equity are equal to its total assets (Assets = Liabilities + Equity).
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