1) If a company has Liabilities of $1 and Equity of $10 what must its assets be?

2) If a company has assets of $8 and Equity of $2 what must its Liabilities be?

3) The following are excerpted values from a company's financial statements as of and for the year ended 12/31/20:

Cash $5

Revenues $17

Rent Expense $4

Accounts Payable $6

Cost of Goods Sold $8

Income Tax Expense $2

Accounts Receivable $9

Compute Net Income (NOTE: not all numbers above are used to answer this question).

4) What is the purpose of the Trial Balance report?

a. To prove that the company has positive cash flows.

b. To prove that the company is profitable.

c. To show that Assets are greater than Liabilities.

d. To prove that the sum of all debit balances in the company is equal to the sum of all credit balances.

5) Complete the following sentence: an account's normal balance side is

A. the side of the account's T-account used to increase the account's balance.

B. is on the left side of the account's T-account.

C. the side of the account's T-account used to decrease the account's balance.

D. is on the right side of the account's T-account.

6) Which of the following statements must always be true when putting a company's accounts together?

A. The total of all debit balances must ALWAYS be equal to the total of all credit balances.

B. The total of all Revenues must ALWAYS be equal to the total of all Expenses.

C. The company must declare bankruptcy if its cash outflows for the current year exceed its cash inflows for the current year.

D. Equity must always be a positive value.