2.03_FI93 H. Marketing Applications Review

A balance sheet shows

• how much money a company owes.

• where a company spends its money.

• a company’s current stock price.

• the salaries of individual employees.

The balance sheet is sometimes called the

• statement of retained earnings.

• cash-flow statement.

• income statement.

• statement of financial position.

All of a business’s assets come from two sources—borrowing and/or

• donations.

• investment.

• credit cards.

• banks.

Which of the following is the accounting equation:

• Owner’s Equity = Assets X Liabilities

• Assets = Liabilities – Owner’s Equity        

• Assets = Liabilities + Owner’s Equity

• Liabilities = Owner’s Equity + Assets

The portion of a business’s value that belongs to its owners or stockholders is known as

• accounts receivable.

• equity.

• liability.

• income.

The balance sheet has a close relationship with the company’s

• mortgage.

• fair market value.

• income statement.

• statement of financial position.

Which user studies a balance sheet to determine if the company will provide a good rate of return?

• Investor

• Bank

• Vendor

• The business’s manager

Which user studies a balance sheet to determine a company’s creditworthiness?

• The business’s manager

• A business student

• Bank

• Investor

A business’s managers often study a series of past balance sheets to

• understand how much the business owes in taxes.

• identify and analyze financial trends within the company.

• determine whether or not the company is a good investment.

• decide how much credit to extend to the business.

Items of value are listed under which of the following components of the balance sheet:

• Assets

• Liabilities

• Owner’s equity

• Notes