Chapter 2 Flashcards
What is the accounting equation
Assets = Liabilities + Owner’s Equity
Which of the following pieces of information about the income statement is not included in the three-line heading?
a) who
b) what
c) where
d) when
c) where
Which of the following would be listed closest to the bottom of an income statement?
a) net loss
b) utilities expense
c) total expenses
d) fees income
a) net loss
Which of the following, if present, would appear within both the statement of owner’s equity and the balance sheet?
a) total assets
b) capital balance at the end of the period
c) net income
d) withdrawals made by the owner
b) capital balance at the end of the period
Which of the following, if present, would appear within both the income statement and the statement of owner’s equity?
a) net loss
b) total expenses
c) additional investment made by the owner
d) capital balance at the beginning of the period
a) net loss
When the owner invests equipment in a business:
assets and owner’s equity increase.
Owner’s equity is alternatively referred to as which of the following?
net worth
Which of the following is reported on the income statement?
a) assets
b) owners capital balance
c) liabilities
d) expenses
expenses
The Income Statement shows:
the amount of net income or net loss
A profit exists when:
revenues exceed expenses
If the income statement covered a six-month period ending on November 30, 20X1, the third line of the income statement heading would read:
Six-month Period Ended November 30, 20X1.
Which financial statement is reported as of a specific date?
Balance Sheet
The changes that have occurred in the owner’s financial interest during the reporting period are shown on the:
statement of owner’s equity
The Statement of Owner’s Equity is calculated as follows:
beginning capital + net income − withdrawals + additional investments = ending capital.
A business transaction is:
any financial event that changes the resources of the firm.
