The Accounting Equation

Question 1

The key principle behind the _______ _______: stuff the business owns equals the stuff the business owes.

Answer 1

accounting equation

Question 2

The key principle behind the accounting equation: stuff the business _______ equals the stuff the business _______.

Answer 2

owns, owes

Question 3

The key principle behind the accounting equation: stuff the business owns _______ the stuff the business owes.

Answer 3

equals

Question 4

Stuff the business owns is called _______.

Answer 4

assets

Question 5

Stuff the business _______ is called assets.

Answer 5

owns

Question 6

Stuff the business _______ is called liabilities when it is owed to third parties, but it is called equity when owed to owners (or shareholders).

Answer 6

owes

Question 7

Stuff the business owes is called _______ when it is owed to third parties, but it is called equity when owed to owners (or shareholders).

Answer 7

liabilities

Question 8

Stuff the business owes is called liabilities when it is owed to _______ _______, but it is called equity when owed to owners (or shareholders).

Answer 8

third parties

Question 9

Stuff the business owes is called liabilities when it is owed to third parties, but it is called _______ when owed to owners (or shareholders).

Answer 9

equity

Question 10

Stuff the business owes is called liabilities when it is owed to third parties, but it is called equity when owed to _______ (or _______ ).

Answer 10

owners (or shareholders)

Question 11

What is the accounting equation?

Answer 11

Assets = Liabilities + Equity

Question 12

List seven examples of assets.

Answer 12

(1) cash (2) accounts receivable (3) inventory (4) plant, property, and equipment (4) land and buildings (5) investments (7) goodwill

Question 13

What does A/R stand for?

Answer 13

accounts receivable

Question 14

What does PPE stand for?

Answer 14

plant, property, and equipment

Question 15

What does L&B stand for?

Answer 15

land and buildings

Question 16

List four examples of liabilities.

Answer 16

(1) accounts payable (2) loans payable (3) wages payable (4) taxes payable

Question 17

What does A/P stand for?

Answer 17

accounts payable

Question 18

List two examples of equity.

Answer 18

(1) owner’s/shareholder’s equity (2) retained earnings

Question 19

What does R/E stand for?

Answer 19

retained earnings

Question 20

_______ _______ are profits held for future use.

Answer 20

Retained earnings

Question 21

Retained earnings are _______ held for future use.

Answer 21

profits

Question 22

Retained earnings are profits held for _______ _______.

Answer 22

future use

Question 23

The _______ _______ is one of the three main financial statements (along with the income statement and cash flow statement). It is a snapshot of your assets, liabilities, and equity at a single point in time.

Answer 23

balance sheet

Question 24

What does B/S stand for?

Answer 24

balance sheet

Question 25

The balance sheet is one of the three main _______ _______ (along with the income statement and cash flow statement). It is a snapshot of your assets, liabilities, and equity at a single point in time.

Answer 25

financial statements

Question 26

The balance sheet is one of the three main financial statements (along with the _______ _______ and _______ _______ _______). It is a snapshot of your assets, liabilities, and equity at a single point in time.

Answer 26

income statement and cash flow statement

Question 27

The balance sheet is one of the three main financial statements (along with the income statement and the cash flow statement). It is a snapshot of your _______, _______, and _______ at a single point in time.

Answer 27

assets, liabilities, and equity