Accounting Equation & Common Accounting Formulas

Front

What is the basic accounting equation for a sole proprietorship?

Back

Assets = Liabilities + Owner's Equity

Front

In the accounting equation, what does equity represent in a publicly held corporation? Options: Owner's Equity, Partner's Equity, Investor's Equity

Back

Shareholder's Equity

Front

Which of the following is NOT a component of the accounting equation? Assets, Equity, Liabilities, Revenue

Back

Revenue

Front

What is the purpose of the double-entry accounting system?

Back

To balance the accounts by having corresponding debit and credit entries

Front

How is gross profit calculated?

Back

Sales - Cost of Goods Sold

Front

What does the current ratio measure?

Back

The ratio of assets to liabilities

Front

Which formula is used to calculate the break-even point? Options: Fixed costs - (Sales price per unit / Variable cost per unit), Fixed costs x (Sales price per unit + Variable cost per unit), Fixed costs / (Sales price per unit - Variable cost per unit), Fixed costs + (Sales price per unit - Variable cost per unit)

Back

Fixed costs / (Sales price per unit - Variable cost per unit)

Front

What is the expanded accounting equation used for?

Back

To determine shareholder equity details

Front

The Accounting Equation must always be in balance?

Back

True