Fred Company paid $48,000 for a two-year insurance policy, ($2,000 per month), on October 1 and recorded the $48,000 as a debit
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Answer:
C. Liabilities
Explanation:
Financial accounting can be defined as the field of accounting involving specific processes such as recording, summarizing, analysis and reporting of financial transactions with respect to business operations over a specific period of time.
Owner's equity is simply what a person owns outrightly and it is also referred to as net worth. It can be defined as the value of financial and non-financial assets owned by a person minus the total outstanding liabilities or debts of that person. Simply stated, owner's equity refers to the difference between the amount a person own (asset) and the amount owed (liability).
Mathematically, net worth is given by the formula;
Making liabilities the subject of formula, we have;
In Financial accounting, liability can be defined as the amount of money being owed by an individual or organization to another.
Simply stated, liability is a debt being owed and as such it usually has "payable" in its account title on the balance sheet.
Generally, liabilities are recorded on the right side of the balance sheet and it comprises of financial informations such as warranties, bonds, loans, deferred revenues, mortgages, account payable etc.
Hence, Assets minus Owner's Equity is equal to Liabilities.