Tutor profile: Sharifa A.
What is the balance sheet equation? why is it important?
Assets = Liabilities + Equities The equation helps us with journal entries. It has to remain balanced. When one side of the equation increases, the other side has to increase by the same amount, or the same side has to decrease by the same amount. Example: *you receive cash for services you provided* You record an increase in cash, which affects assets, now your assets have increased. You can't stop because your equation is not balanced. You record an increase in sales revenue, which affects equity, now your equities have increased. Your equation is now balanced and you can move on.
Should you watch an extra hour of TV, or study instead?
To answer this you must think in terms of the marginal cost (MC) and benefit (MB). Evaluate whether the benefit of one more hour of watching TV is greater than the cost of it.
What is economics?
The study of how people make decisions. How people allocate their limited resources to satisfy their nearly unlimited wants.
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