Accounting Information Literacy Assessment

The balance sheet has 3 key sections. From memory, select them from the list.

• Income

• Liabilities

• Equity

• Accruals

• Assets

Using the names of 3 key balance sheet sections, complete the accounting equation below that proves the balance sheet is balance:

Assets =Liabilities + ______

• Income

• Expenses

• Equity

• Profit

To be classified as an asset of the business the item must be owned by that business and be tangible

• True

• False

The gross profit margin tells the business how much income tax they have to pay.

• True

• False

Profits earned are accumulated in the balance seet.

• True

• False

Cash and income are the same concept in accounting.

• True

• False

Without using leverage (also known as gearing) most businesses would struggle to grow.

• True

• False

In the balance sheet, the total sources of funds must always equal the total uses of funds at any point in time.

• True

• False

The concept of gross profit margin is not that useful these days for most businesses.

• True

• False

A business can be increasing its turnover (total sales) substantial and making healthy profits and still run out of cash.

• True

• False