What is the main purpose of the balance sheet?

To report the revenue of a business over a period.

To report the assets and claims against those assets on a specific date.

To show how the business acquired and spent cash during the period.

To list all the expenses of a business.

Which of the following is NOT a section of the balance sheet?

Liabilities and Owner’s Equity sections

What is the primary purpose of the statement of cash flows?

To show the profit or loss for the period.

To report the balances in the permanent accounts.

To show how the business acquired and spent cash during the period.

To list the owner's equity and liabilities.

How do you prove the equality of the balance sheet?

Ensure total revenues equal total expenses.

Ensure total liabilities and owner’s equity equal total assets.

Ensure total cash inflows equal total cash outflows.

Ensure total expenses equal total liabilities.

What is the first step in preparing the assets section of the balance sheet?

List each asset account name and its balance.

Write the word 'Assets' in the center of the column.

Enter the account balances in the first amount column.

Draw a single rule under the last account balance.

What is a quick ratio used to measure?

The profitability of a business.

The relationship between short-term assets and current liabilities.

The total liabilities of a business.

The total assets of a business.

What does the term 'working capital' refer to?

The total revenue of a business.

The difference between total assets and total liabilities.

The amount by which current assets exceed current liabilities.

The total equity of a business.

How is the return on sales ratio calculated?

Dividing total assets by total liabilities.

Dividing cash by total receivables.

Dividing current assets by current liabilities.

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