Business Finance ( Accounting & BEA)

Question 1

What are the 5 Accounting elements?

Answer 1

-Revenue
-Expenses
-Assets
-Liabilities
-Owner’s Equity

Question 2

Define Revenue + example

Answer 2

Income a business has earned (e.g. sales revenue, interest revenue)

Question 3

Define Expenses + example

Answer 3

Costs of business operation (e.g. rent, employee wages, electricity bills)

Question 4

Define Assets + Example

Answer 4

Resources that a business owns or controls and is expected to bring in future economic benefits (e.g. inventory, cash at bank, premises, vehicles)

Question 5

Define Liabilities + example

Answer 5

Debts or obligations a person or company owes to someone else, usually a sum of money (e.g. loans, accounts payable, mortgage loan)

Question 6

Define Owner’s Equity + example

Answer 6

The portion of a company’s assets that an owner can claim, what is left after subtracting a company’s liabilities from its assets

Question 7

The Accounting Equation

Answer 7

OE= A - L
A= OE + L
L= A - OE

Question 8

Accounting Equation and Balance Sheet

Answer 8

• statement of the assets, liabilities and owner’s equity of a business at a particular point in time

TOTAL ASSETS must equal (balance) with TOTAL EQUITY (OE+L)

Question 9

Income statements

Answer 9

• report on the financial performance of a firm
  -comparing revenue and expenses ONLY
  -during a reporting period to determine if a profit or loss was made

Question 10

Factors impacting Income Statements

Question 11

Strategies to improve Profit

Question 12

Calculating Net Profit Margin

Answer 12

NPM= Net profit/Net Sales x 100

Question 13

Calculating Gross Profit Margin

Answer 13

GPM= Gross Profit/ net sales x 100