Business Assets, Liabilities, and Equity Quiz

Assets

• A business asset is a piece of property or equipment purchased exclusively or primarily for business use.
• Assets can be classified as current, non-current, short-term, long-term, operating, and capitalized.
• Tangible Assets have a physical form. Examples include machinery, buildings and land.
• Intangible Assets do not have a physical form. Examples include patents, trademarks, copyrights, goodwill and brand recognition.

Liabilities

• Liabilities represent a company’s legal financial debts or obligations that arise during the course of business operations.
• Examples of liabilities include loans, accounts payable, mortgages, deferred revenues and accrued expenses.

Equity

• Equity is the value of an asset less the amount of all liabilities on the asset.

Revenue

• Revenue is the amount of money that a company actually receives during a specific period.
• Revenue includes discounts and deductions for returned merchandise.

Cost of Goods Sold (COGS)

• COGS are directly attributable to the production of goods sold in a company.
• COGS include the cost of the good itself, along with direct labor costs used to produce the good.

Accounts Receivable

• Accounts Receivable are balances of money due to a company for goods or services that have been delivered or used but not yet paid by customers.

Accounts Payable

• Accounts Payable represents a company’s obligation to pay off a short-term debt to its creditors or suppliers.

Notes Payable

• A Notes Payable is a written promissory note.
• A Notes Payable is an agreement whereby a borrower obtains a specific amount of money from a lender and promises to pay it back with interest over a predetermined time period.

Accruals

• Accruals are earned revenue and incurred expenses that have an overall impact on an income statement.

Cash on Hand

• Cash on Hand represents the amount of money in the form of cash that a company has after it has paid all its costs.

Inventory

• Inventory is an array of finished goods used in production that a company holds.
• Inventory serves as a buffer between manufacturing and order fulfillment.

Depreciation

• Depreciation is an accounting method of allocating the cost of a tangible asset over its useful life.
• Depreciation accounts for declines in value over time.

Amortization

• Amortization is an accounting technique used to lower the cost value of an intangible asset incrementally through scheduled charges to income.
• Amortization applies to intangible assets with a finite life.

Interest Expenses

• Interest Expenses are non-operating expenses shown on the income statement.

Net Income

• Net Income is equal to net earnings (profit).
• Net Income is calculated as sales less COGS, SG&A, operating expenses, depreciation, interest, taxes, and other expenses.

Test your knowledge on the fundamental concepts of business assets, liabilities, equity, and revenue. This quiz covers definitions, classifications, and examples that are essential for understanding financial statements. Perfect for students and professionals looking to strengthen their finance fundamentals.