Accounting 30S Chapter 2 Review Questions
How is a person’s financial position calculated?
A – L = Equity
Define asset
An item of value owned by a business
Define liability
Amount owed
Define owner’s equity
The difference between Assets and Liabilities or the owner’s investment in a business
What is the accounting equation?
Assets = Liabilities + Owner’s Equity
Which financial statement shows the financial position of a business?
Balance Sheet
Where does the name of a business appear in the heading of a balance sheet (on which line)?
First line
Which side of a balance sheet are the assets listed on?
Left side
Which side of a balance sheet does a creditor appear on?
Right side
What does a single ruled line beneath a column of figures indicate?
Numbers above the line have been totaled (added or subtracted)
When is a double line drawn beneath a total?
When it is a final total
What is the most liquid asset?
Cash
In what order are liabilities listed on a balance sheet?
Maturity date or the order of the date they will be paid
What are Accounts Receivable?
Debts of customers or customers who owe money to the business (debtors)
What are accounts payable?
Debts owed by the business to suppliers or creditors
Who has first claim against the assets of a business?
Creditors
Who benefits from gains made in closing down a business?
The owner
Who suffers most from losses incurred in closing down a business?
The owner
What does GAAP stand for?
Generally Accepted Accounting Principles
What does IFRS stand for?
International Financial Reporting Standards
What does the Business Entity Concept say?
A business’s financial information is kept separate from personal financial information
What does the Cost Principle say?
Assets are recorded at their cost price
What does the Continuing Concern Concept say?
It is assumed that the business will continue to operate in the future
Give an example of a current asset
Cash, Accounts Receivable, Supplies
Give an example of a long-term asset
Land, building, equipment, automobile
Give an example of a current liability
Accounts Payable, Bank Loan due within a year
Give an example of a long-term liability
Bank Loan due in more than a year, Mortgage
What is the name of the balance sheet under IFRS?
Statement of Financial Position
In a spreadsheet what is formed by the intersection of columns and rows?
Cells
What would you call a cell in row 52 and in column C?
C52
What is the spreadsheet term for words and titles?
Labels
What is the spreadsheet term for numbers?
Values
What symbol tells a spreadsheet program you are using a formula?
= sign
What does =SUM(B3:B50) telling a spreadsheet to do?
To add all the values from cells b3 to b50
What does =A7-A5 telling a spreadsheet to do?
Subtract the number in cell a5 from the number in cell a7