Formulas
What is the accounting equation?
Assets= Liabilities + Equity
Financial statements can be used by which of the following groups?
All the above
Name 3 examples of an asset
Possible Answers:
Cash, Inventory, Building, Equipment, Accounts Receivable, Land
What is the formula for Net Income?
Revenue- Expenses
Which financial statement lists all of the businesses assets, liabilities, and equity?
Balance Sheet
What does the historical cost principle state?
Assets should be recorded at their actual cost
If assets equal $500 and liabilities equal $100... how much equity does the company have?
$400
Dividends are included in the balance sheet
True or False
Dividends are calculated with retained earnings therefore unnecessary to include on balance sheet
What 2 components make up equity?
Paid-In Capital and Retained Earnings
What is the formula for liabilities?
Assets- Equity= Liabilities
What item flows from the income statement to the statement of retained earnings?
Net Income
Assets are ordered on the balance sheet in order of...
Liquidity
What is the formula for ending retained earnings?
Beginning Retained Earnings
(+or-) Net Income - Divendends
= End Retained Earnings
Which financial statement would show how well a company performed over the past year?
Income Statement
Accounting guidelines formulated by the Financial Standards Accounting Board that govern how accounting is practiced describes the...
Generally Accepted Accounting Principles (GAAP)