Basic Accounting Principles

Avery, Oliver, and Ava started a car wash service during the summer. Which of the following represents the amount of revenue they generated from their business?

• A. The number of cars they washed

• B. The cost of soap and water they used

• C. The profit they made after deducting the cost of soap and water

• D. The money they had left after paying for all their expenses

Abigail, Grace, and Nora are reviewing the financial statements of their school's bake sale. They look at the net sales figures and the cost of goods sold for the event. Which of the following would they get if they subtract the cost of goods sold from the net sales figures?

• A. Sales figures

• B. Costs of goods sold

• C. Gross profit

• D. Net income

Luna, Anika, and Scarlett run a small bakery together. They are trying to understand their business expenses. Which of the following would directly relate to the costs they incur for baking goods, such as the flour, sugar, and other ingredients they purchase from their suppliers?

• A. The total sales figures of their bakery

• B. The costs of goods sold in their bakery

• C. The gross profit of their bakery

• D. The net income of their bakery

James, Charlotte, and Benjamin started a cafe together. After a bustling year, they are reviewing their financial statements. Which of the following represents the amount of money their cafe has earned after paying income taxes?

• A. The total sales figures for the year

• B. The costs of goods they sold throughout the year

• C. Their gross profit for the year

• D. Their net income for the year

Scarlett and Abigail started a lemonade stand. To understand their business performance, they need to calculate their profit. Which of the following equations should they use?

• A. Revenue - Expenses = Profit

• B. Revenue + Expenses = Profit

• C. Revenue - Net income = Profit

• D. Revenue - Sales costs = Profit

Anika and Mason have started a lemonade stand, and Aiden is assisting them with the finances. As they review their earnings and expenses, they need to understand a basic accounting principle. Which of the following represents the equation they should use to assess their financial position?

• Assets = Liabilities + Owner’s Equity

• Assets = Expenses - Revenue

• Assets = Net income - Revenue

• Assets = Liabilities + Net income

Mason, Rohan, and David are discussing their investments. Mason believes that the most liquid asset among the ones they own is real estate, Rohan thinks it's stocks, and David says it's cash. Who is correct?

• Mason with Real estate

• Rohan with Stocks

• David with Cash

• None of them

Samuel, Ethan, and Mason are running a small business. They are trying to understand their financials. Which of the following is NOT considered a current asset in their business?

• Checking accounts

• Accounts receivable
  

• Money market accounts

• Land

Nora started a small business and Benjamin is helping her with the accounts. They came across a term 'Accounts payable'. Can you help Aiden understand whether 'Accounts payable' is classified as which of the following?

• Fixed assets

• Current liabilities

• Owner’s equity

• Net income

Ethan, Evelyn, and Nora are participating in a business simulation game. They are managing a virtual company and are trying to understand the impact of debits and credits on their simulated balance sheet. Which of the following statements is TRUE?

• When Ethan debits the virtual company's bank account, it decreases their assets

• When Evelyn credits the virtual company's expense account, it increases their expenses

• When Nora debits the virtual company's loan account, it decreases their liabilities

• When Evelyn credits the virtual company's equipment account, it increases their assets