Which of the following equations is equivalent to the according equation? A. Equ

Question

Which of the following equations is equivalent to the according equation? A. Equity = liabilities - assets B. Owners' equity = assets - liabilities C. Revenues - expenses = net income D. Net income = expenses - revenues + taxes E. Profit = sales - revenues is the total amount of money received from the sale of goods or services, as well as from other business activities such as the rental of property and investments. A. Profit B. Expense C. Net income D. Revenue E. Price The process of spreading the costs of long-lived assets such as buildings and equipment over the total number of accounting periods in which they are expected to be used is called A. depreciation B. gross profit C. budget D. net income E. revenue At the end of each accounting period, the dollar amounts in all the revenue and expense accounts arc moved into an account called. A. net earnings B. net expense C. interest expense D. retained expense E. retained earnings The presents a snapshot of an organizations financial position at a given moment. A. profit margin B. statement of cash flows C. net income D. per share data E. balance sheet The financial document that presents a "snapshot" of an organization's financial position at a given moment is called a(n): A. income statement B. balance sheet. C annual report. D budget. E. statement of cash flow

Explanation / Answer

Answer 1. We know the Accounting equation as Owner's Equity + Liabilities = Assets. Thus rearrange this equation and look at the options, option b seems to be rearrange form of the Accounting equation. (B)

Answer2: Revenue is the total amount of money received for the sale of goods and services as well as from other business activities. To arive at the profit you must subtract all expenses. (D)

Answer3 : Depretiation is the method of allocating the cost of an asset over the no. of years so that at the end of useful life of the assets there are enough funds for the replacement of the asset.

Answer4: Net earnings are the difference between dollar amounts of Revenues and Expenses at the end of the year. Thus they are transferred to Net earnings.

Answer 5 : Balance Sheet is a position statement of a company which shows the assets and liabilities of a company on a particular date.

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