Balance sheet

Question 1

What is a balance sheet?

Answer 1

A formal financial statement that illustrates the assets, liabilities, and owner’s equities of a business
-Prepared third when done in order
-Comparable to other years in the business (easy)

Question 2

What is the standard format on the heading of a balance sheet?

Answer 2

Business name
Balance sheet
Date
(in thousands of dollars)

Question 3

Property of monetary value of a company.
-Makes a business money

Answer 3

Asset

Question 4

Cash or other assets that will be converted to cash or consumed within one year

Answer 4

Current asset

Question 5

Long term capital that is invested in the small business

Answer 5

Fixed, non-current assets

Question 6

All assets can be classified in terms of ___

Answer 6

Liquidity

Question 7

What is the equation used with a balance sheet?

Answer 7

Assets = Liabilities + Owner’s equity

Question 8

What are some examples of current assets?

Answer 8

-Cash
-Petty cash
-Checks and money orders
-Accounts receivable
-Supplies
-Inventory
-Prepaid expenses

Question 9

What are some examples of fixed, non-current assets?

Answer 9

-Equipment
-Automobiles
-Furnishings
-Land
-Buildings
-Note receivables
-Intangible assets (brand names, copyrights, patent, trademarks, and goodwill)

Question 10

Any debts a business owes
-Costs a business money

Answer 10

Liabilities

Question 11

Liability easier to pay off in cash within one year

Answer 11

Current liability

Question 12

Liability harder to pay off in cash within one year

Answer 12

Fixed, non-current liability

Question 13

What are some examples of current liabilities?

Answer 13

-Accounts payable
-Unearned revenue
-Taxes payable
-Wages payable

Question 14

What are some examples of fixed, non-current liabilities

Answer 14

-Mortgage payable
-Notes payable
-Bonds payable

Question 15

-The amount by which the total assets exceeds the total liabilities of a business
-The owners financial interest in the business

Answer 15

Owner’s equity

Question 16

What is classified as owner’s equity?

Answer 16

-Stock (capital, common, preferred)
-Retained earnings

Question 17

Why is a prepaid expense not a liability?

Answer 17

A prepaid expense is an asset when acquired.
-Drink chips and gift cards as the person who bought them

Question 18

Why is unearned revenue not considered an asset?

Answer 18

An unearned revenue is a liability representing revenues received in advanced.
-Drink chips and gift cards being the establishment where they will be turned in.
-You still owe something even though the word revenue is used

Question 19

What is the difference between a tangible and intangible asset?

Answer 19

Can it be seen or touched?
-No: intangible
-Yes: tangible