Balance Sheet
The accounting equation is
Assets = Liabilities + Owners Equity
Another common term used to refer to the income statement is called a_______
Profit and Loss statement or P & L
______ is one of the three sections on the cash flow statement.
cash flow from operating activities
cashflow from investing activities
cash flow from financing activities
The section of the balance sheet that summarizes money owed that must be paid back within one year.
Current Liabilities
Gross profit is calculated by taking _____ and subtracting ______ from that figure.
Revenue (sales) minus cost of goods sold
Proceeds received from the sale of equipment is entered into which of the three sections of the cash flow statement?
cash flow from investing activities
ABC Co. has current assets of $50,000 and total assets of $150,000. ABC has current liabilities of $30,000 and total liabilities of $80,000. What is the amount of ABC's owner's equity?
$70,000
On December 1 a company borrowed $100,000 at 12% per year. The interest will be paid quarterly, with the first payment due on March 1. What interest, if any should the company report on its income statement for December? Assume the business is using the accrual method for accounting.
$1,000
A decrease of inventory on hand would have a positive or negative impact on the cash flow statement?
positive
On December 1, ABC Co. hired Juanita Perez to begin working on January 2 at a monthly salary of $4,000. ABC's balance sheet as of December 31 will show a liability of
No liability
Use the data needed from the data set below to determine the operating profit margin:
Accounts payable = $12,125
Revenue = $9,025
Inventory = $9,175
Gross profit = $18,900
Operating profit = $6,820
Current assets = $15,000
Net income = $2,750
Operating profit $6,820 / Revenue $9,025 = 76%
When a company reduces its accounts payable, this has a negative or positive impact on cash flow?
negative
ABC Co. incurs cleanup expense of $500 on December 30. The supplier's invoice states that the $500 is due by January 10 and ABC will pay the invoice on January 9. ABC follows the accrual basis of accounting and its accounting year ends on December 31. As of December 31what is the effect of the cleanup service on the December balance sheet of ABC, if any?
Liabilities increased
In what section of the income statement do you record payroll expenses?
Operating expenses or S, G & A
When a company sells a piece of equipment for less than what it paid, this has a negative or positive impact on cash flow?
positive