Understanding the Balance Sheet Quiz

What is a balance sheet?

• A financial statement that summarizes a company's revenues and expenses over a period of time.

• A financial statement that provides a snapshot of a company's financial condition at a specific point in time, showing assets, liabilities, and shareholders' equity.

• A detailed plan of future financial transactions.

• A record of all the transactions in a company's cash account.

Which of the following is considered an asset on a balance sheet?

• Loans payable

• Accounts receivable

• Share capital

• Bonds payable

What does the accounting equation represent?

• Assets = Liabilities + Shareholders' Equity

• Assets + Liabilities = Shareholders' Equity

• Assets = Liabilities - Shareholders' Equity

• Assets + Shareholders' Equity = Liabilities

Which of the following is NOT a liability?

• Mortgage payable

• Inventory

• Accounts payable

• Accrued expenses

What is the purpose of a balance sheet?

• To measure the profitability of a company over a specific period.

• To record the day-to-day transactions of a company.

• To provide information about the financial position of a company at a specific point in time.

• To track the company's stock price movements.

Shareholders' equity can be calculated by:

• Adding liabilities to assets.

• Subtracting liabilities from assets.

• Adding assets to liabilities.

• Subtracting assets from liabilities.

Which of the following would appear under the assets section of a balance sheet?

• Bonds issued

• Cash

• Unearned revenue

• Dividends payable

Current liabilities are:

• Obligations that a company expects to pay within one year.

• Long-term financial obligations.

• The portion of long-term debt due within the next year.

• Both A and C are correct.

Which of the following equations correctly shows how to calculate net income from a balance sheet?

• Net Income = Assets - Liabilities

• Net Income = Assets + Liabilities

• Net Income cannot be directly calculated from a balance sheet.

• Net Income = Shareholders' Equity - Assets

Retained earnings are part of:

• Current assets.

• Non-current assets.

• Shareholders' equity.

• Current liabilities.