Accounting Basics: Assets, Liabilities, and Equity

Play an AI-generated podcast conversation about this lesson

What is the main difference between Current Assets and Intangible Assets?

Current assets are due within 1 year, while intangible assets are not time-bound.

Current assets are owned outright by the company, while intangible assets are always associated with debt.

Current assets can be converted into cash in 1 year, while intangible assets cannot be resold. (correct)

Current assets include property, plant, and equipment, while intangible assets include patents and copyrights.

How do Accrual Accounting and Cash-basis Accounting differ?

Accrual Accounting is used for liabilities, while Cash-basis Accounting is used for assets.

Cash-basis Accounting is more accurate than Accrual Accounting in recognizing revenue.

Accrual Accounting is simpler than Cash-basis Accounting in practice.

Accrual Accounting records revenue when it is earned, while Cash-basis Accounting records revenue only when cash is received. (correct)

Which of the following statements best describes Stockholders Equity?

Stockholders Equity represents the company's debts.

Stockholders Equity includes patents and copyrights.

Stockholders Equity is the same as Current Liabilities.

Stockholders Equity consists of common stock and retained earnings. (correct)

What happens to the numbers on the Income Statement at the end of a period?

The numbers are reset to zero for the next period. Signup and view all the answers

When do expenses appear on the Income Statement?

When they are incurred to generate revenue. Signup and view all the answers

Which financial statement shows the Net Income or Net Loss of a company?

Income Statement Signup and view all the answers

What is the formula for calculating Net Income on an Income Statement?

Total Revenues - Total Expenses Signup and view all the answers

Which of the following is considered a Current Liability?

Bonds Payable Signup and view all the answers

On a Balance Sheet, what does Equity represent?

Ownership Interest in the Company Signup and view all the answers

Which of the following is an example of an Intangible Asset?

Patents Signup and view all the answers

What does the formula Balance Sheet Assets = Liabilities + Equity represent?

The double-entry bookkeeping system Signup and view all the answers

When calculating Retained Earnings, which of the following is subtracted from Net Income?

Dividends Signup and view all the answers

What is the purpose of the Statement of Retained Earnings?

To explain the changes in Retained Earnings over a period Signup and view all the answers

'Outstanding stock' refers to shares that are:

'Issued and in the hands of investors' Signup and view all the answers

What happens to the numbers on the Income Statement at the end of a period?

They are eliminated to start fresh for the next period. Signup and view all the answers

Accounting Basics: Assets, Liabilities, and Equity

Podcast Beta

Questions and Answers

What is the main difference between Current Assets and Intangible Assets?

How do Accrual Accounting and Cash-basis Accounting differ?

Which of the following statements best describes Stockholders Equity?

What happens to the numbers on the Income Statement at the end of a period?

When do expenses appear on the Income Statement?

Which financial statement shows the Net Income or Net Loss of a company?

What is the formula for calculating Net Income on an Income Statement?

Which of the following is considered a Current Liability?

On a Balance Sheet, what does Equity represent?

Which of the following is an example of an Intangible Asset?

What does the formula Balance Sheet Assets = Liabilities + Equity represent?

When calculating Retained Earnings, which of the following is subtracted from Net Income?

What is the purpose of the Statement of Retained Earnings?

'Outstanding stock' refers to shares that are:

What happens to the numbers on the Income Statement at the end of a period?

More Quizzes Like This

Mastering Financial Statements

Accounting Basics: Assets, Liabilities, Equity, Revenue, Expenses

Conceptos básicos de contabilidad: panadería y consultorio médico

Accounting Basics Quiz

Upgrade to continue