Question

The ledger of a business is .... account, and furniture account is ... account. Select the answer that shows the correct terms to (1) and (2) in the above statement in the correct order.

a. an income, an expense
b. an income, an asset
c. a liability, an income
d. an equity, an expense

Answer 1

In the context of a business's ledger, an equity account refers to the owner's stake in the business, while a furniture account is an asset account that records the value of furniture owned by the business.

Step-by-step explanation:

The ledger of a business is an equity account, and the furniture account is an asset account. The correct terms to fill in the blanks for the given statement are (1) an equity, and (2) an asset. A ledger in accounting is a collection of the financial accounts of a business, which includes assets, liabilities, equity, income, and expenses. The ledger holds accounts for assets like furniture, where the value is recorded, and it's considered a tangible asset. Equity accounts represent the owner's equity in the business and include the net worth, which is total assets minus total liabilities.