Accounting Basics
These are debts or obligations a business owes.
What are liabilities?
This equation represents the relationship between what a business owns and owes. (Provide the equation)
What is Assets = Liabilities + Owner’s Equity?
This financial statement is a snapshot of a business at a single point in time.
What is a balance sheet?
This is money earned from selling goods or services.
What is revenue?
This acronym stands for the official rules accountants follow.
What is GAAP?
These are things a business owns.
What are assets?
This is the owner’s equity when a business has $10,000 in assets and $4,000 in liabilities.
What is $6,000?
This financial statement shows performance over a period of time.
What is an income statement?
These are the costs of running a business.
What are expenses?
This is why GAAP is important for businesses and investors.
Answer Options: What is it creates consistency and trust? What is it creates a common language for businesses? What is it makes financial statements comparable?
Cash, equipment, and inventory are examples of these.
What are assets?
This is the total assets if liabilities are $7,000 and owner’s equity is $3,000.
What is $10,000?
This financial statement shows revenue, expenses, and whether a business made a profit or loss over time.
What is an income statement?
This formula is used to calculate profit. (The income statement equation)
What is revenue minus expenses?
Financial, managerial, auditing, and tax are examples of these.
What are types of accounting?
Notes payable and accounts payable are examples of these.
What are liabilities?
Calculate the owner's equity.
Cash: $15,000
Accounts Payable: $8,000
Accounts Receivable: $4,000
Equipment: $7,000
Inventory: $2,000
Notes Payable: $9,000
What is $11,000?
This financial statement includes assets, liabilities, and owner’s equity.
What is a balance sheet?
This is the profit when revenue is $5,000 and expenses are $3,500.
What is $1,500?
This type of accounting helps managers make internal decisions.
What is managerial accounting?
This is what remains after liabilities are subtracted from assets.
What is owner's equity?
Calculate the owner's equity.
Cash: $5,000
Accounts Payable: $3,000
Accounts Receivable: $2,000
Equipment: $8,000
Inventory: $1,000
Notes Payable: $1,000
What is $12,000?
Identify 3 people who look at financial statements.
(You may NOT say accountants.)
Options: Corporate Leaders (CEO, CFO), Business Owners, Managers, Employees, Investors
Given the following Income Statement Data, identify how much net profit the company made.
Revenue:$500,000
Cost of Goods Sold: $220,000
Utilities Expense: $10,000
Rent Expense: $15,000
Advertising Expense: $5,000
Salary Expense: $25,000
$225,000
This type of accounting reviews financial statements for accuracy.
What is auditing?