DETAILED ANSWERS|LATEST
UPDATE!!!!2025/2026|GUARANTEED PASS|GRADED
What is the purpose of the balance sheet? - ANSWER Report the financial position of
the business
What is the purpose of the income statement? - ANSWER Report business
performance
What is the purpose of cash flows? - ANSWER Monitor incoming and outgoing money
What is the key takeaway of the balance sheet? - ANSWER Can the business meet
current financial obligation?
What is the key takeaways of the income statement? - ANSWER How can the business
improve performance?
What are the key takeaways of the statement of cash flows? - ANSWER Where is my
money generated and spent during a time period?
What are the components of the balance sheet? - ANSWER Assets, liabilities, and
equity
What are the components of the income statement? - ANSWER Revenues and
expenses
1
, What are the components of the statement of cash flows? - ANSWER Cash in, cash
out.
Why should we track assets? - ANSWER Info from recorded sales, inventory, assets,
and depreciation show a business's financial performance, resources, and obligations.
Current Assets - ANSWER Assets that can be converted into cash quickly (within a
year)
Fixed Assets (long-term assets) - ANSWER Long term assets are acquired for the long-
term benefit of the business. They extend beyond a year.
What are types of current assets? - ANSWER Cash (or cash equivalents), AR, Inventory,
Prepaid expenses, Investments (marketable securities), Notes receivable
Notes Receivable - ANSWER Money that is owed to a business, so it is considered an
asset.
What are types of fixed assets? - ANSWER PP&E and intangible assets
What are intangible assets? - ANSWER Copyrights, Patents, IP, Goodwill
What are the steps to tracking assets? - ANSWER 1. Identify the asset type
2. Check if there's an existing account in the chart of accounts.
3. If needed, add the account
4. Record the asset in the journal
2
UPDATE!!!!2025/2026|GUARANTEED PASS|GRADED
What is the purpose of the balance sheet? - ANSWER Report the financial position of
the business
What is the purpose of the income statement? - ANSWER Report business
performance
What is the purpose of cash flows? - ANSWER Monitor incoming and outgoing money
What is the key takeaway of the balance sheet? - ANSWER Can the business meet
current financial obligation?
What is the key takeaways of the income statement? - ANSWER How can the business
improve performance?
What are the key takeaways of the statement of cash flows? - ANSWER Where is my
money generated and spent during a time period?
What are the components of the balance sheet? - ANSWER Assets, liabilities, and
equity
What are the components of the income statement? - ANSWER Revenues and
expenses
1
, What are the components of the statement of cash flows? - ANSWER Cash in, cash
out.
Why should we track assets? - ANSWER Info from recorded sales, inventory, assets,
and depreciation show a business's financial performance, resources, and obligations.
Current Assets - ANSWER Assets that can be converted into cash quickly (within a
year)
Fixed Assets (long-term assets) - ANSWER Long term assets are acquired for the long-
term benefit of the business. They extend beyond a year.
What are types of current assets? - ANSWER Cash (or cash equivalents), AR, Inventory,
Prepaid expenses, Investments (marketable securities), Notes receivable
Notes Receivable - ANSWER Money that is owed to a business, so it is considered an
asset.
What are types of fixed assets? - ANSWER PP&E and intangible assets
What are intangible assets? - ANSWER Copyrights, Patents, IP, Goodwill
What are the steps to tracking assets? - ANSWER 1. Identify the asset type
2. Check if there's an existing account in the chart of accounts.
3. If needed, add the account
4. Record the asset in the journal
2
