Accounting Review. Warmup 2

Which one is right?

• Asset = Owner's equity + Liability

• Asset = Owner's equity - Liability

• Asset + Owner's equity = Liability

• Asset + Owner's equity = expense

Mr.W has current assets of $500 and total assets of $1500. ABC has current liabilities of $300 and total liabilities of $800. What is the amount of ABC's owner's equity

• 200

• 700

• 900

• 800

What is the purpose of an income statement?

• calculate the bank balance

• calculate net assets

• calculate sales

• calculate net profit

Which of the following means money spent?

• income

• expense

• net income

• gross income

When expenses are greater than income?

• expense

• net loss

• net income

• net gain

Income = 1000

Cost of Goods Sold = 200

Expenses = 300

Gross Profit = ?

• 800

• 500

• 700

• 300

How could a business improve net profit?

• reduce expenses
• increase COGS
• reduce sales
• increase expenses

Resources owned by a company (such as cash, accounts receivable, vehicles) are reported on the balance sheet and are referred to as __________.

• Assets
• Liabilities
• Owner Equity
• Equity

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 accounting equation must always be

• balanced

• uneven

• zero

• equal to the square root of 5