Business Accounting Test Review

If Mary buys a house for $400,000 and it is now worth $500,000 what is her equity

$100,000

What is a balance sheet?

A balance sheet is a financial statement that summarizes a company's assets, liabilities, ad shareholder's equity at a specific point in time.

What is a budget?

A budget is an estimate of the cost, revenues, and resources over a specified period, reflecting a reading of future financial conditions and goals

If a balance sheet is a snapshot in time, what is an income statement

An Income Statement is a financial statement that measures a company's financial performance over a specific accounting period

A balance sheet measures assets and liabilities. What two items does an income statement measure?

An Income Statement measures Revenue vs. Expenses

If Edwin borrows money, which two columns is it listed under?

Assets and Liabilities

What are assets? Give one example.

Assets are things that you own ex.) Property owned by a person or company

What is the accounting equation?

Assets=Liabilities+Owner's Equity

Expenses are divided into what two types? Give an example of each.

Costs that do not fluctuate-Car Payment Costs that very depending on various factors Cell Phone Plan

What is equity? Give one example.

Equity is Capital amasses by the company after all liabilities are subtracted ex.) Original owner Investment, Stocks, Profits

What is another way to define Liability, Assets, and equity?(What we...)

Liabilities are what we owe Assets are what we own and Equity is the difference between them

What are liabilities? Gove one example.

Liabilities is amounts owed to lenders and suppliers ex.) When someone is responsible for debt or financial obligation

What is liquidity?

Liquidity is how easy you can convert something to cash

What is the MAIN RULE about a balance sheet?

The Main Rule of a balance sheet is that both side are balanced