Accounting Basics
What is the process of recording and organizing a business's financial information called?
What is accounting?
State the accounting equation.
What is Assets = Liabilities + Owner's Equity?
What is the name of the visual account format shaped like the letter T?
What is a T-account?
Which financial statement reports revenues and expenses?
What is the income statement?
Which ratio measures a business's ability to pay short-term debts?
What is the current ratio?
Name one group of people who use accounting information to make decisions.
Who are owners, managers, employees, banks, or government agencies?
What are resources owned by a business called?
What are assets?
What record organizes transactions by individual account?
What is the general ledger?
Which financial statement reports assets, liabilities, and owner's equity at a specific date?
What is the balance sheet?
What is the formula for the current ratio?
What is Current Assets ÷ Current Liabilities?
What is the main purpose of accounting information?
What is helping people make informed financial decisions?
A business has $10,000 in assets and $4,000 in liabilities. What is owner's equity?
What is $6,000?
What record initially records transactions in chronological order?
What is the general journal?
What is the formula for net income?
What is Revenue − Expenses?
A business has $12,000 in current assets and $4,000 in current liabilities. What is its current ratio?
What is 3?
Which accounting career focuses on examining financial records for accuracy?
What is an auditor?
A business borrows $2,000 from a bank. Which two parts of the accounting equation increase?
What are assets and liabilities?
An account has $900 in debits and $300 in credits. What is its balance?
What is a $600 debit balance?
A business earns $8,000 in revenue and has $5,500 in expenses. What is its net income?
What is $2,500?
A business has $2,000 in net income and $10,000 in net sales. What is its profit margin?
What is 20%?
Why might a bank review a business's financial statements before lending it money?
To determine whether the business can repay the loan.
A business has $25,000 in assets and $9,000 in owner's equity. How much are its liabilities?
What are $16,000?
What does it mean if total debits and total credits on a trial balance are equal? Can errors still exsist?
The totals agree, but errors may still exist in the accounting records.
Which financial statement shows changes in the owner's equity during a period?
What is the statement of owner's equity?
A business has $15,000 in total liabilities and $60,000 in total assets. What is its debt-to-assets ratio?
What is 25%?