Question: 1. Indicate the income statement equation and define each element.
2. When accounting was developed in the 14th and 15th centuries, businesses had very short lives. For instance, a business might have been created for a single shipment of goods from Europe to North America. After delivering the goods and distributing profits among those who financed the shipment, the business ceased to exist. In more recent centuries, businesses began to experience longer lives. Identify the accounting concept needed when accounting for businesses with long lives. Explain what this concept means and why it is necessary for modern-day accounting.