Balance Sheet

Question 1

Assets =

Answer 1

Liabilities + OE

Question 2

Balance Sheet accounts are?

Answer 2

Real accounts

Not closed and carry money from one period to the next

Question 3

Assets are

Answer 3

What a business owns, resources of the business

Question 4

Define Current Assets

Answer 4

Cash or cash equivalents

And supplies used by the business

Question 5

How are assets listed?

Answer 5

Liquidity: expected conversion to cash

Question 6

Property, plant, equipement

Answer 6

Assets used over a long period of time

Question 7

Define Current Liabilities

Answer 7

Debts that must be paid in one year like accounts payable, short term debt, accrued expenses

Question 8

How are current liabilities listed?

Answer 8

First to be paid first

Question 9

Mortgage, long-term debt

Answer 9

Liabilities lasting over the fiscal year

Question 10

Define Owner’s Equity

Answer 10

“Net Worth”
Owner’s right, claim or interest
= Assets - Liabilities

Question 11

Define Invested Capital

Answer 11

Cash invested into the business by the owner

Question 12

Define Retained Earnings

Answer 12

Profits or losses that the business has made during its years of operation

Question 13

Statement of Retained Earnings

Answer 13

Start with Capital
Add new investmest by the owner and period’s net income
Subtract withdrawals
This equals OE on balance sheet

Question 14

Owner’s Equity =

Answer 14

Beginning balance + net income + additional investments - withdrawals

Question 15

Retained Earnings =

Answer 15

Beginning balance + net income - dividends paid