1.) Which of the following is the accounting equation?

a. Water = one hydrogen atom + two oxygen atoms

b. Assets = Liabilities + Cash Flows

c. Money = Power

d. Assets = Liabilities + Equity

2.) Equity is what you have left after liquidating your assets and settling all of your debts.

Select one:

True

False

3.) Which of the following statements is not true about Balance Sheets?

a. A balance sheet does not report dividends.

b. All publicly traded companies are required to prepare a balance sheet.

c. A balance sheet is also known as the statement of financial position.

d. A Balance sheet will show the results of operations.

4. ) Which of the following statements about assets is true?

a. Assets cannot be tangible and intangible.

b. Assets are amounts you owe.

c. Assets can acquired with debt or equity financing, but not both.

d. Assets are things you own.

5.) Which of the following statements about liabilities is true?

a. Liabilities are amounts you owe but are not the same as debts.

b. A student loan is not a form of liability.

c. Liabilities are amounts you owe and are also called debts.

d. A car is an example of a liability.

6.) How would the purchase of equipment with $500 cash be recorded on an accounting worksheet?

a. Cash would decrease and equipment would increase.

b. Cash would be increased and the equipment would be decreased.

c. Accounts payable would be increased and equipment would be increased.

d. Because two assets are involved in the transaction, no entry is needed.

7.) Which two items from the list are used to calculate the current ratio?

Total assets

Current assets

Total Equity

Common Stock

Total Liabilities

Current Liabilities

Select one:

a. Current assets and total equity

b. Current assets and total assets

c. Total assets and total liabilities

d. Current assets and current liabilities

8.) Given the below information, what is the current ratio?

Total Current assets = $500

Accounts Receivable = $200

Total Assets = $7,000

Total Current Liabilities = $250

Accounts Payable = $100

Total Liabilities = $4,500

Total Equity = $2,500

Select one:

a. 2.0

b. 28

c. 0.50

d. 3

9.) Which of the following is reported on the balance sheet?

a. Cost of Goods Sold

b. Treasury Stock

c. Net income

d. Dividends

10.) Which of the following statements is an analysis statement?

a. Current assets were $5,000.

b. The current ratio is 2.5.

c. Net income increased from last year.

d. The company has twice the current assets needed to pay the current liabilities when they come due.