In the accounting equation, claims on the business are of two broad types:
A) bills payable and bills receivable.
B) debtors and creditors.
C) liabilities and equity.
D) loans to and loans from outsiders.

Question

Quizplus · Accepted Answer

Claims on the business are either owed to creditors (liabilities) or the business owners/shareholders (equity). Bills payable and bills receivable are specific types of liabilities and loans to/from outsiders refer to specific transactions, but do not encompass all claims on the business. Debtors and creditors are terms used to describe the same two types of claims, but do not cover all possible claims on the business.

In the Accounting Equation, Claims on the Business Are of Two