Basic Accounting Concepts
What is the correct equation for profit?
Revenue - Expenses = Profit
What is the most liquid asset?
Cash
What is also known as a profit and loss statement?
Income Statement
Who sets accounting principles
Financial Accounting Standards Board
What is the amount of money the business has earned after paying income taxes?
Net income
What is the basic accounting equation?
Assets = Liabilities + Owner’s Equity
What shows any changes which have occurred in the numerical balances of a company?
Profit and loss statement
Amount of money the business has earned after paying income taxes
Net Income
What are the costs directly associated with making or acquiring products such as materials purchased from outside suppliers?
Costs of goods sold
Out of checkings account, accounts receivable, money market accounts, and land, which of the following is NOT a current asset?
Land
What shows the numerical balances determined by the chart of accounts?
Balance Sheet
Also called total equity, found by subtracting liabilities from assets
Net worth
What represents the amount of revenue generated by a business?
Sales figures
What is Accounts Payable classified as?
Current Liabilities
What is the last step in the business operating cycle?
Collect payment for credit sales
Comprised of all short-term obligations owed by your business to creditors, suppliers and other vendors
Accounts Payable
What is derived by subtracting the cost of goods sold from the net sales figures?
Gross profit
Which of the following statements is TRUE?
A. Debits decrease assets
B. Credits increase expenses
C. Debits decrease liabilities
D. Credits increase assets
C. Debits decrease liabilities
When suppliers are paid which of the following occurs?
A. Accounts payable is increased by a debit
B. Accounts payable is decreased by a debit
C. Accounts payable is decreased by a credit
D. Accounts payable is increased by a credit
B. Accounts payable is decreased by a debit
Total dollar value of all fixed assets in your business, less any accumulated depreciation
Total Fixed Assets