True or false: If a business expects to have financial losses in their first year, it means they have a bad business idea and should not start it.
False
Pretend you own a lemonade stand. Would lemons be a direct or indirect expense?
Direct
What is the purpose of a balance sheet, and how is it structured?
to provide a snapshot of a company's financial position at a specific point in time. It shows what a company owns (assets), what it owes (liabilities), and the
Give me one example of an appreciating asset.
Answers will vary
What is the difference between revenue and profit?
Revenue represents the total income generated by a business from its primary operations. Profit, is the financial gain a company makes after all expenses.
What is the accounting equation?
Assets = Liabilities + Equity
Give me an example of a depreciating asset.
Answers will vary
Give me an example of revenue.
Answers will vary
In accounting, what is an obligation or debt that an entity (typically a business) owes to another party?
A liability
What is the primary purpose of creating financial projections for a business?
To plan and predict future financial performance, set realistic goals, and show investors and stakeholders how the future might look
What is another name for a profit and loss statement?
Income statement
Imagine you have started a shoe business. Your average shoe price is $40 and you are guessing you will sell about 10 shoes a day during your first year. If you are open every day (365 days) what should your year one revenue projection be?
$146,000
True or false: Cash is the most liquid asset you can have.
True
Revenue - Expenses = Profit: What financial statement breaks down this equation with more detail?
Income statement
If ABC plumbing has $500 in assets and $300 in liabilities, what is the owners equity?
$200
Did Chester's Churros turn a profit last month with $800 in revenue and $900 in expenses?
No
In accounting, what do we call a resource with economic value that is owned or controlled by an entity?
An asset
Pretend you own a jewelry store. Would the rent you pay for your retail space be consider a direct or indirect expense?
Indirect
In the context of accounting, please provide a definition for equity.
Equity, also known as owner's equity or shareholders' equity, represents the residual interest in the assets of an entity after deducting its liabilities.
Give me 2 examples of liabilities that a business might have.
Answers will vary
Is rare art work an example of an extremely liquid asset?
No
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