Basic Accounting Principles (Intro)

Which of the following are the costs directly associated with making or acquiring products such as materials purchased from outside suppliers?

• Gross profit

• Costs of goods sold

• Net income

• Sales figures

Which of the following represents the amount of revenue generated by a business?

• Costs of goods sold

• Net income

• Gross profit

• Sales figures

Which of the following is the correct equation for profit?

• Revenue - Net income = Profit

• Revenue - Expenses = Profit

• Revenue - Sales costs = Profit

• Revenue + Expenses = Profit

Which of the following is the amount of money the business has earned after paying income taxes?

• Costs of goods sold

• Sales figures

• Net income

• Gross profit

Which of the following is derived by subtracting the cost of goods sold from the net sales figures?

• Net income

• Sales figures

• Costs of goods sold

• Gross profit

Which of the following is the most liquid asset?

• Cash

• Machinery

• Stocks

• Real estate

Accounts payable are classified as which of the following?

• Fixed assets

• Owner’s equity

• Net income

• Current liabilities

Which of the following statements is TRUE?

• Credits increase assets

• Debits decrease liabilities

• Debits decrease assets

• Credits increase expenses

Which of the following is NOT a current asset?

• Land

• Checking accounts

• Money market accounts

• Accounts receivable

Which of the following represents is the basic accounting equation?

• Assets = Expenses - Revenue

• Assets = Liabilities + Net income

• Assets = Liabilities + Owner’s Equity

• Assets = Net income - Revenue