Which of the following equations represents the balance sheet? (Difficulty: Easy)
Assets + Liabilities = Shareholders’ equity
Assets = Liabilities = Shareholders’ equity
Assets = Liabilities - Shareholders’ equity
Assets = Liabilities + Shareholders’ equity
Earnings are the result of the difference between: (Difficulty: Easy)
Revenues and assets
Revenues and liabilities
Liabilities and expenses
Revenues and expenses
What is the result of recording the initial investment by shareholders? (Difficulty: Easy)
An equal increase in both assets and shareholders’ equity
An increase in assets and a decrease in shareholders’ equity
An equal increase in both assets and liabilities
A decrease in assets and an increase in liabilities
A service is sold for 250 CU on 10 March. The service is carried out in March; it is invoiced on 10 April and paid for on 31 May. When is the transaction recognized? (Difficulty: Moderate)
On 10 March
On 10 April
On 31 March
On 31 May
What is the result of recording debt reimbursement? (Difficulty: Easy)
An increase in both cash and liabilities
An increase in both cash and shareholders’ equity
A decrease in both cash and shareholders’ equity
A decrease in both cash and liabilities
The accrual principle means that revenues are recorded in the income statement at the time of the transaction and not at the time the cash is received. (Difficulty: Easy)
True
False
A revenue: (Difficulty: Easy)
Is a decrease in shareholders’ equity
Is a decrease or an increase in shareholders’ equity
Has no impact on shareholders’ equity
Is an increase in shareholders’ equity
How do we describe the process of adjusting the value of an asset by recognizing that it is consumed in a way that does not completely eliminate the resource? (Difficulty: Easy)
Adjustment
Valuation
Depreciation
Waning
Retained earnings are equivalent to available cash. (Difficulty: Easy)
True
False
What is the ratio between current assets and current liabilities called? (Difficulty: Moderate)