Ch 6 Study Guide: Purchasing Individual Stocks

Revenue is defined as: A) Money coming into the business through sales B) Costs of doing business C) Assets owned by the company D) Liabilities owed to others.

• A) Money coming into the business through sales

• B) Costs of doing business

• C) Assets owned by the company

• D) Liabilities owed to others.

Expenses refer to: A) Money coming into the business B) Costs of doing business like paying rent and wages C) Assets that can be converted to cash D) Amounts owed to other businesses.

• A) Money coming into the business

• B) Costs of doing business like paying rent and wages

• C) Assets that can be converted to cash

• D) Amounts owed to other businesses.

Owner's Equity is calculated as: A) Assets + Liabilities B) Assets - Liabilities C) Revenue - Expenses D) Income - Expenses.

• A) Assets + Liabilities

• B) Assets - Liabilities

• C) Revenue - Expenses

• D) Income - Expenses

Withdrawals occur when an owner takes _______ out of a business.

• Money

• Assets

• Liabilities

• Revenue

Current assets can be converted to cash within:

• A) A year

• B) A month

• C) A week

• D) A day

Liabilities are: A) Amounts owed to other businesses B) Assets owned by the company C) Revenue generated by sales D) Expenses incurred by the company.

• Amounts owed to other businesses

• Assets owned by the company

• Revenue generated by sales

• Expenses incurred by the company

P/E ratio is related to ____. A) Price to earning calculation B) Price to sales calculation C) Price to debt calculation D) Price to asset calculation.

• Price to earning calculation

• Price to sales calculation

• Price to debt calculation

• Price to asset calculation

What is the formula for the income statement?

• A) Revenue - Expenses = Net Income/Loss

• B) Assets = Liabilities + Owner's Equity

• C) Beginning OE + Investments - Withdrawals +/- Net Income/Loss = Ending OE

• D) Revenue + Expenses = Net Income/Loss

What is the formula for the statement of Owner's Equity?

• A) Revenue - Expenses = Net Income/Loss

• B) Assets = Liabilities + Owner's Equity

• C) Beginning OE + Investments - Withdrawals +/- Net Income/Loss = Ending OE

• D) Revenue + Expenses = Net Income/Loss

What is the formula for the Balance Sheet?

• Revenue - Expenses = Net Income/Loss

• Assets = Liabilities + Owner's Equity

• Beginning OE + Investments - Withdrawals +/- Net Income/Loss = Ending OE

• Revenue + Expenses = Net Income/Loss