Basic Accounting Concepts

Is this accounting cycle correct?

• Yes

• No

Which of the following is not one of the elements of the financial statements?

• Assets

• Equity

• Transactions

• Income

An _____ is defined as a present economic resource controlled by the entity as a result of past events.

A current asset is a resource with a life span that is usually longer than a year.

• True

• False

Which of the following is an example of a non-current asset?

• Cash in the bank

• Employees

• Customer that owes our business money

• Office computer

Which of the following is not an expense?

• Money owed to suppliers

• Salaries

• Advertising costs

• Payment to the municipality for water and electricity

The following is an example of a current liability:

• Commission received

• Money owed to SARS

• Telephone account paid to Telkom

• Mortgage loan

______ is the net worth of a business.

The equation(s) below represent(s) how the equity in a business is determined:

• Equity =

  Assets – Liabilities

• Assets =

  Equity + Liabilities

• Liabilities =

  Assets – Equity

• All of the above

• None of the above

Profit is determined by subtracting income from expenses.

• True

• False