Accounting Basics

The overall purpose of accounting is to

• maintain accurate reports.

• compile the business’s expenses.

• keep track of sales.

• control the finances of the business.

What are the two elements of income statement?

• income/revenue

• Expenses

• Liabilities

• Owner's Equity

Which of the following is considered an asset?

• Bank Loan
• Mortgage
• Debit Card
• Savings account

Which of the following is considered a liability?

• Savings Account
• Mortgage
• Savings bond
• Coin Collection

The financial statement that reports the revenues and expenses for a period of time such as a year or a month is the:

• Balance Sheet
• Income Statement
• Statement of Cash Flows
• None of These

The financial statement that reports the assets, liabilities, and stockholders' (owner's) equity at a specific date is the:

• Balance Sheet
• Income Statement
• Statement of Cash Flows
• Cash Statement

Accounting entries involve a minimum of how many accounts?

• One
• Two
• Three
• Four

What is assets? 

• Cash in the business
• Anything that a creditor has financial claim to 
• What remains after liabilities are paid 
• any item or property owned by the business

Obligations (amounts owed) are reported on the balance sheet and are referred to as __________.

• Assets
• Liabilities
• Debt
• Owner Equity

The accounting equation is

• Assets = Liabilities + Owner's Equity
• Assets = Liabilities - Owner's Equity
• Assets - Owner's Equity + Liability