balance sheet rev

Question 1

asset definiton

Answer 1

assets are what the business owns such as cash, stock , equipment.

Question 2

Liabilities

Answer 2

Liabilities are what the business owes such as debts owed to the bank. (bank loan , overdraft)

Question 3

accounting equation?

Answer 3

assets = Liabilities + owners equity

Question 4

whats owners equity

Answer 4

owners equity is the owners investment and retained profit in the business

Question 5

purpose of balance sheet

Answer 5

allows business owners and other interested people see what the business owns and owes at a given point in time.

Question 6

classify the follwing in Assets , Liabilities Owners equity ?

Inventory
Retained profit
Accounts receivable
bank
accounts payable
capital
loan

Answer 6

Inventory = ASSETS
retained profit= OWNERS EQUITY
accounts receivable = ASSETS
bank = ASSETS
Accounts payable= LIABILITIES
capital = OWNERS EQUITY
loan = LIABILITIES

Question 7

what is profit

Answer 7

profit is any amount/revenue earned left after paying off the expenses

Question 8

Explain why an Income statement is labelled ‘ for the period ending’ and not ‘as at’

Answer 8

The Income statement is for a specific reporting period example a month, quarter and a year.

Question 9

Explain two uses of preparing an ‘Income statement’.

Answer 9

1. To determine business profit.
2. To control expenses and take corrective actions where required.