1.The fundamental rule of the balance sheet is assets equals liabilities plus owners equity.

True

False

2.Owners equity are the things a business owns, such as cash, inventory, and money owed from customers.

True

False

3.The cumulative profits of the business since inception are known as retained earnings.

True

False

4.Assets and liabilities on a balance sheet are always presented at current market value.

True

False

5.The main sections of a balance sheet are:

Assets, liabilities, and net profits

Assets, liabilities, and owners equity

Assets, liabilities, and cumulative cash contributions

Operating activity, financing activity, and asset activity

6.The balance sheet shows:

How much money a business made last month

Where the money comes from and goes to

What a business owns and what it owes

The current market value of a business

7.Current assets include:

Prepaid expenses

Work in process

Credit union deposits

All of the above

8.The net plant, property and equipment as presented on a balance sheet reflects:

The current value of the plant property and equipment owned by the business

The acquisition cost the plant, property and equipment owned by the business

The current value of the plant, property and equipment less accumulated depreciation

The historical cost of the plant, property and equipment less accumulated depreciation

9.The liabilities section of the balance sheet includes:

Net losses and retained earnings

Operating expenses and payments due

Current liabilities and long-term liabilities

Current assets and current liabilities

10.Retained earnings are:

The amount of profits retained as cash

The amount of profits retained as cash and reinvested in the business

The cumulative profits of the business since inception

The cumulative profits of the business since inception not paid to the owners