Principles of Accounting (Quiz 2)

If revenues for the accounting period total $5,000, and the expenses total $1,000, then the net income (loss) must total

• $6,000

• $4,000

• ($6,000)

• ($4,000)

When a company pays a bill using cash, what the effect on its cash account?

• Increases

• Decreases

• Stays the same

• There is no cash account

Received cash from owner as investment

• Increase cash & capital
• Decrease cash & capital
• Increase assets & liabilities
• Decreases assets & liabilities

Any amounts owed by a business and reported on the balance sheet are referred to as ________________.

• assets
• liabilities
• profit
• expenses

Anything of value that is owned by the company (such as cash, accounts receivables, vehicles, etc.) are reported on the balance sheet and are referred to as _______________.

• assets
• liabilities
• profit
• income

How to calculate gross profit on the income statement?

• Operating expenses - Sales= Gross profit

• Sales - Cost of goods sold= Gross profit

• Income - Expenses = Gross profit

• Cost of sales - Sales =Gross profit

Interest on a bank overdraft is an/a..

• revenue

• expenses

• liabilities

• capital

Double entry in accounting means there must be________ entries for every transaction?

• two

• Three

• six

• one

A general ledger/T account has a ______ and _______ side.

• cash receipt and debtors

• debit and payments

• debit and credit

• creditors and debtors

Assets increase on the ________ side?

• subsidiary

• T-account

• credit

• debit