Question: 1. The resources owned by a business are called assets. The debts of the business are called liabilities and the equity of the owners is called stockholders' equity. The relationship between assets, liabilities, and stockholders' equity is expressed as the accounting equation.
2. Net income is the excess of revenue over expenses, or $7,500. If expenses exceed revenue, the difference is a net loss. Dividends are the opposite of the stockholders investing in the business and do not affect the amount of net income or net loss.