Understanding Accounting Basics 2

What is the primary goal of accounting?

• To produce financial reports

• To manage company logistics

• To track employee performance

• To advertise the business

What does revenue in a business signify?

• Investments received

• Total debts of the company

• Earnings from sales of products or services

• Money spent in operations

What results in a net loss for a company?

• Expenses are less than revenue

• Revenue is greater than expenses

• Expenses exceed the revenue

• Balanced revenue and expenses

How is net income calculated?

• Expenses minus revenue

• Revenue minus expenses

• Revenue plus expenses

• Total assets minus liabilities

What is the result of subtracting expenses from revenue called?

• Operational cost

• Investment return

• Net income

• Gross profit

What would be considered a net loss?

• Revenue > Expenses

• Expenses < Revenue

• Expenses > Revenue

• Revenue = Expenses

What does owner's equity include?

• Customer data

• Supplier contracts

• Net income

• Company debts

In Jill's example, what was her total revenue last month?

• $1,450

• $350

• $3,000

• $1,550

What are considered expenses in Jill's scenario?

• Rent, advertising, and supplies

• Revenue and net income

• Customer payments

• Bank loans

How much did Jill spend on advertising?

• $1,550

• $350

• $200

• $1,000