Accounting Fundamentals CFI ACTUAL UPDATED QUESTIONS AND CORRECT
ANSWERS
What are the 3 components of a balance sheet? Assets = Liabilities + Equity
What are the three components of an income statement? Revenues
Expenses
Profit or loss
What are the three components of a cash flow Operating
statement? Investing
Financing
What are the components of Assets on the Balance Current - used in a year
sheet?
Noncurrent - used longer than a year
How are non current assets broken into 2 categories? Tangible and non tangible
What are the components of Liabilities on the balance Current and noncurrent.
sheet?
What are retained earnings? Total profit ever earned - (all losses & dividends)
What are the two ways to balance a balance sheet? 1. Double entry once on the assets and once on the liabilities.
2. twice on the same side one as a positive and one as a negative.
, How is an income statement constructed? Revenue - operating expenses = Gross Profits -Indirect Operating costs =
Operating Income - Cost of debt financing -Tax =Net Income
What are the 3 components of Expenses on the Income General and Administrative
Statement?
Research and Development
Sales and Marketing
How is Gross Profit calculated? Sales - COGS
How do you calculate EBIT Gross Profit - Expenses
What are the usual 3 components of the Current assets 1. Cash
on the balance sheet? 2. AR (Accounts Receivable)
3. Inventory
What are the usual 2 components of the long term
asssets? 1. Building
2. Machinery
What happens to the balance sheet when a company Increase Share holders Equity Revenue
sells on credit? Increase Current Assets Accounts receivable
What if it buys inventory on credit? Current liabilities increases
Assets Inventory Increases
Where are the AR located on the balance sheet? Current Assets
What Does a credit mean on balance sheet? Right.
increases a liability or equity account, or decreases an asset or expense account.
What does debit mean on the balance sheet? Left.
increases an asset or expense account, or decreases a liability or equity account
What are the components of shareholders equity on the Common shares and retained earnings.
balance sheet?
What are their subcatagories? Retained earnings is made up of:
Revenue
COGS
Expenses
What is deferred revenue? Cash received before revenue is earned
What are the 8 components of the income statement? Revenues
- Direct Operating costs
Gross Profit
-Indirect operating costs (COGS)
Operating Income
- Cost of debt finance
-Tax
Net Income
ANSWERS
What are the 3 components of a balance sheet? Assets = Liabilities + Equity
What are the three components of an income statement? Revenues
Expenses
Profit or loss
What are the three components of a cash flow Operating
statement? Investing
Financing
What are the components of Assets on the Balance Current - used in a year
sheet?
Noncurrent - used longer than a year
How are non current assets broken into 2 categories? Tangible and non tangible
What are the components of Liabilities on the balance Current and noncurrent.
sheet?
What are retained earnings? Total profit ever earned - (all losses & dividends)
What are the two ways to balance a balance sheet? 1. Double entry once on the assets and once on the liabilities.
2. twice on the same side one as a positive and one as a negative.
, How is an income statement constructed? Revenue - operating expenses = Gross Profits -Indirect Operating costs =
Operating Income - Cost of debt financing -Tax =Net Income
What are the 3 components of Expenses on the Income General and Administrative
Statement?
Research and Development
Sales and Marketing
How is Gross Profit calculated? Sales - COGS
How do you calculate EBIT Gross Profit - Expenses
What are the usual 3 components of the Current assets 1. Cash
on the balance sheet? 2. AR (Accounts Receivable)
3. Inventory
What are the usual 2 components of the long term
asssets? 1. Building
2. Machinery
What happens to the balance sheet when a company Increase Share holders Equity Revenue
sells on credit? Increase Current Assets Accounts receivable
What if it buys inventory on credit? Current liabilities increases
Assets Inventory Increases
Where are the AR located on the balance sheet? Current Assets
What Does a credit mean on balance sheet? Right.
increases a liability or equity account, or decreases an asset or expense account.
What does debit mean on the balance sheet? Left.
increases an asset or expense account, or decreases a liability or equity account
What are the components of shareholders equity on the Common shares and retained earnings.
balance sheet?
What are their subcatagories? Retained earnings is made up of:
Revenue
COGS
Expenses
What is deferred revenue? Cash received before revenue is earned
What are the 8 components of the income statement? Revenues
- Direct Operating costs
Gross Profit
-Indirect operating costs (COGS)
Operating Income
- Cost of debt finance
-Tax
Net Income
