1. Which arethetwo main financial statements? Balance Sheet and Statement of cash flow Income statement and statement of cash flow Balance Sheet and Income statement Income statement and statement of retained earnings 2. When a liability account increases, what must happen at the same time for the accounting equatoin to stay in balance? An asset account must increase An equity account must decrease Another liability account must decrease All ofthe above are possible. 3. The basic accounting equation must stay in balance at the beginning of each year at the end of each year at the end of each quarter at all times 4. which ofthe following is not a purpose of the Balance Sheet? Shows what the company "owns" at a particular point of time Shows what the company "owes" at a particular point of time Shows the net worth of a company at a particular point oftime Shows the performance of a company over a period oftime