The Accounting Equation
What is the basic accounting equation that must always remain in balance?
Assets = Liabilities + Owner’s Equity
What is the specific word used that describes how quickly an asset can be converted into cash?
Liquidity
What is the term for the money received from the sale of goods or services?
Revenue(s)
Is "Cash" classified as an Asset, Liability, or Owner's Equity?
If a business has Assets of $70,000 and Liabilities of $15,000, what is the value of the Owner's Equity?
$55,000 ($70,000 - $15,000)
In what specific order must liabilities be listed on a Balance Sheet?
Is "Accounts Payable" classified as an Asset, Liability, or Owner's equity account?
Liability
According to the rules of a Balance Sheet and an Income Statement, what do double underlines represent?
Final Totals!
Calculate the Assets if a business has Liabilities of $70,000 and Owner’s Equity of $40,000.
$110,000
Which financial statement must be prepared first: the Income Statement or the Balance Sheet?
Income Statement!
On which financial statement would you find "Salaries Expense"?
Income Statement!
If a business has a "Net Loss" (Expenses are higher than Revenue), how must that final number be formatted on the Income Statement?
It must be recorded in brackets (red font is optional!)
List the three items that must be included in the three-line heading of a Balance Sheet.
Who (Name of business), What (Name of statement), and When (Single Date)
A company has $150,000 in Total Revenue and $25,000 in Total Expenses. Do they have a net income or net loss, and what is that number?
Net Income of $125,000
Which two types of accounts are subtracted from each other to determine if a business has a Net Income or a Net Loss?
Revenues and Expenses
Use the following data for S. Rogers to calculate his Owner's Equity (Net Worth) on November 12, 2029. All the items listed below are the assets and liabilities that he currently owns or owes.
- Cash in the Business Bank Account $22,500
- Photography Equipment $8,400
- Delivery Van $18,000
- Small Business Loan $5,500
- Mortgage on the Studio Building $145,000
- Studio (building) $210,000
($101,600)
List these four assets in their correct order on a Balance Sheet: Building, Land, Equipment, Vehicles.
Land, Building, Vehicles, then Equipment
Is "Accounts Receivable" an Asset or a Liability, and what does it represent?
Asset; it represents money owed to the business by customers.
Explain the difference between the "When" line of a Balance Sheet heading versus an Income Statement heading.
A Balance Sheet shows a "Snapshot" or a single specific date (e.g., March 31, 2030), while an Income Statement shows a "Period of Time" (e.g., For the Month Ended March 31, 2030 or Month of March 31, 2030).