BASIC BUSINESS & ACCOUNTING FORMULAS

What is the formula for the accounting equation?

• Assets = Liabilities + Equity

• Assets = Liabilities - Equity

• Assets = Liabilities * Equity

• Assets = Liabilities / Equity

What does gross income/profit measure?

• Efficiency in using labor and supplies

• Net profit per dollar of revenue

• Ability to cover short-term debt

• Profitability of an investment

What is the formula for net income/profit?

• Gross Income/Profit - All Expenses

• Sales - Cost of Goods Sold (COGS)

• Current Assets / Current Liabilities

• Net Income / Revenue

What does net profit margin measure?

• Efficiency in using labor and supplies

• Net profit per dollar of revenue

• Ability to cover short-term debt

• Profitability of an investment

What does the current ratio indicate?

• Efficiency in using labor and supplies

• Net profit per dollar of revenue

• Ability to cover short-term debt

• Profitability of an investment

What does the markup percentage measure?

• Efficiency in using labor and supplies

• Net profit per dollar of revenue

• Ability to cover short-term debt

• Profitability of an investment

What does COGS stand for?

• Cost of Goods Sold

• Current Operating Gross Sales

• Current Outstanding Gross Sales

• Cost of Goods Supplied

What is the formula for COGS?

• Beginning Inventory + Purchases During the Period - Ending Inventory

• Assets = Liabilities + Equity

• Gross Income/Profit - All Expenses

• Current Assets / Current Liabilities

What is the break-even point?

• When total sales equal total expenses

• When net income equals zero

• When gross income equals zero

• When current assets equal current liabilities

What is the formula for ROI?

• (Investment Gain - Cost of Investment) / Cost of Investment

• Assets = Liabilities + Equity

• Gross Income/Profit - All Expenses

• Current Assets / Current Liabilities