Beginners Guide to Financial Statements; SEC (2007)

Front

What equation did Dr.D use in class during week #1? Options: x+y=z, A - L - E = 0, a+b+c=d, x = a - b/(4ac^2)

Back

A - L - E = 0

Front

Which of the following is the fundamental accounting equation? Assets = Liabilities - Equity, Assets+Liabilities+Equity = 1 million $s, Assets - Liabilities = Revenue, Assets = Liabilities + Equity

Back

Assets = Liabilities + Equity

Answer explanation

The fundamental accounting equation is Assets = Liabilities + Equity. This equation shows that a company's resources (assets) are financed by debts (liabilities) and the owners' equity.

Front

The following formula summarizes which of the following financial statements?
Assets = Liabilities + Equity
Options:
Statement of
Cash Flows
,
Income Statement
(Profit and Loss "P&L")
,
Balance Sheet
,
Statment of
Shareholders' Equity

Back

Balance Sheet

Front

Assets can be thought of as ....
...anything owned of value by the company/you

Back

anything owned of value by the company/you

Front

You buy a house listed for $200,000. You put down $20,000 in principle and get a mortgage for the other $180,000. How much do you have in Assets ("A")?

Back

$200,000

Front

What are assets in the context of a balance sheet?

Back

Things a company owns that have value

Answer explanation

Assets on a balance sheet refer to things a company owns that have value, such as cash, inventory, and property. This distinguishes them from liabilities, which are what the company owes.

Front

Which of the following would you classify as a Fixed Asset on the Balance Sheet? Cash, Inventory, Building, Accounts Receivable

Back

Building

Front

Which of the following is considered an asset? Bank Loan, Accounts Receivable, Mortgage Payable, Unearned Revenue

Back

Accounts Receivable

Front

What does the term "liabilities" refer to in a balance sheet?

Back

Money that a company owes

Answer explanation

In a balance sheet, "liabilities" specifically refer to the money that a company owes to others, such as loans and debts. This distinguishes them from assets, which are things the company owns.

Front

How much do you have in Liabilities ("L") if you buy a house listed for $200,000, put down $20,000 in principle, and get a mortgage for the other $180,000?

Back

$180,000