TN Business and Law Exam Prep Questions
With Correct Answers
5 |Elements |of |the |Income |Statement |- |CORRECT |ANSWER✔✔-1. |Sales
2. |Cost |of |Goods |Sold |(COGS)
3. |Gross |Profit |(GP)
4. |Expenses |(EXP)
5. |Net |Profit |(NP)
Expenses |- |CORRECT |ANSWER✔✔-The |amount |of |money |that |a |business |spends |to |provide |
goods |or |services |to |its |customers |to |operate |the |business.
Expenses |excludes |money |spent |to |acquire |assets.
Expenses |ARE |NOT |directly |related |to |a |project; |therefore |EXPENSES |are |indirect |costs.
Cost |of |Goods |Sold |(COGS) |ARE |directly |related |to |a |project |and |are |known |as |direct |costs.
The |Income |Statement: |Expenses |(Indirect |Costs) |- |CORRECT |ANSWER✔✔-Examples |of |
Expenses: |operating |expenses, |selling |expenses, |general |expenses, |administrative |expenses, |G |
& |A |expenses.
Categories |of |Expenses: |payroll |taxes |on |direct |labor, |fringe |benefits |for |direct |labor, |contract |
supervision, |small |hand |tools, |supplies, |wages, |utilities, |advertising.
The |Balance |Sheet |- |CORRECT |ANSWER✔✔-The |balance |sheet |is |a |list |of |the |assets, |liabilities, |
and |owner's |equity |(net |worth) |of |a |business |on |a |given |date.
, Shows |the |financial |state |of |a |business |on |a |specific |date.
What |the |business |owns, |owes, |and |what |it |is |worth.
The |Balance |Sheet: |Owner's |Equity |(Net |Worth) |- |CORRECT |ANSWER✔✔-Consists |of |Retained |
earnings |and |Profit |or |Loss.
Retained |Earnings |is |the |profit |left |over |from |the |previous |year, |after |expenses, |that |is |left |in |
the |business.
Profit |or |Loss |- |the |difference |between |revenues |and |expenses.
A |positive |number |is |a |profit.
A |negative |number |is |a |loss.
The |Balance |Sheet: |Accounting |Equation |- |CORRECT |ANSWER✔✔-The |balance |sheet |reports |
assets, |liabilities, |and |equities.
The |accounting |equation |shows |the |relationship |between:
what |a |business |owns |(assets)
what |a |business |owes |(liabilities) |
what |a |business |is |worth |(owner's |equity)
ASSETS |= |LIABILITIES |+ |OWNER'S |EQUITY |(NET |WORTH)
*The |assets |must |always |equal |the |liabilities |plus |the |owner's |equity. |They |MUST |balance.
With Correct Answers
5 |Elements |of |the |Income |Statement |- |CORRECT |ANSWER✔✔-1. |Sales
2. |Cost |of |Goods |Sold |(COGS)
3. |Gross |Profit |(GP)
4. |Expenses |(EXP)
5. |Net |Profit |(NP)
Expenses |- |CORRECT |ANSWER✔✔-The |amount |of |money |that |a |business |spends |to |provide |
goods |or |services |to |its |customers |to |operate |the |business.
Expenses |excludes |money |spent |to |acquire |assets.
Expenses |ARE |NOT |directly |related |to |a |project; |therefore |EXPENSES |are |indirect |costs.
Cost |of |Goods |Sold |(COGS) |ARE |directly |related |to |a |project |and |are |known |as |direct |costs.
The |Income |Statement: |Expenses |(Indirect |Costs) |- |CORRECT |ANSWER✔✔-Examples |of |
Expenses: |operating |expenses, |selling |expenses, |general |expenses, |administrative |expenses, |G |
& |A |expenses.
Categories |of |Expenses: |payroll |taxes |on |direct |labor, |fringe |benefits |for |direct |labor, |contract |
supervision, |small |hand |tools, |supplies, |wages, |utilities, |advertising.
The |Balance |Sheet |- |CORRECT |ANSWER✔✔-The |balance |sheet |is |a |list |of |the |assets, |liabilities, |
and |owner's |equity |(net |worth) |of |a |business |on |a |given |date.
, Shows |the |financial |state |of |a |business |on |a |specific |date.
What |the |business |owns, |owes, |and |what |it |is |worth.
The |Balance |Sheet: |Owner's |Equity |(Net |Worth) |- |CORRECT |ANSWER✔✔-Consists |of |Retained |
earnings |and |Profit |or |Loss.
Retained |Earnings |is |the |profit |left |over |from |the |previous |year, |after |expenses, |that |is |left |in |
the |business.
Profit |or |Loss |- |the |difference |between |revenues |and |expenses.
A |positive |number |is |a |profit.
A |negative |number |is |a |loss.
The |Balance |Sheet: |Accounting |Equation |- |CORRECT |ANSWER✔✔-The |balance |sheet |reports |
assets, |liabilities, |and |equities.
The |accounting |equation |shows |the |relationship |between:
what |a |business |owns |(assets)
what |a |business |owes |(liabilities) |
what |a |business |is |worth |(owner's |equity)
ASSETS |= |LIABILITIES |+ |OWNER'S |EQUITY |(NET |WORTH)
*The |assets |must |always |equal |the |liabilities |plus |the |owner's |equity. |They |MUST |balance.
