Every business, from a market stall to a bank, keeps its books on one rule: what it owns equals what it owes plus what belongs to its owners.
⚖️ Assets = Liabilities + Equity
Assets are resources the business controls that will bring future benefit: cash, inventory (stock), equipment, buildings and accounts receivable (money customers owe you).
Liabilities are amounts the business owes to others: bank loans, accounts payable (money you owe suppliers), wages owed and taxes owed.
Equity (also called capital or owner’s equity) is what is left for the owners: Equity = Assets − Liabilities. It grows when owners invest or the business makes a profit, and shrinks with losses or when owners take money out (drawings or dividends).
🖼️ See it
🖼️ See it
🔁 Every transaction keeps it balanced
A transaction always changes at least two things, so the equation never goes out of balance. Follow Maya as she opens a bakery:
1. Maya puts in $10,000 of her own cash Assets +10,000 (cash) Equity +10,000
2. The bank lends $5,000 Assets +5,000 (cash) Liabilities +5,000
3. She buys an oven for $3,000 cash Assets +3,000 (oven) and −3,000 (cash): no change in total
4. She buys $800 of flour on credit Assets +800 (inventory) Liabilities +800 (payable)
Assets 15,800 = Liabilities 5,800 + Equity 10,000
💡 Tips from the job
Ask two questions for every transaction: which two (or more) items change, and does each go up or down? If the equation still balances afterwards, you have recorded it correctly.
Common mistakes. Treating the owner’s personal spending as a business expense (it is drawings, which reduce equity). Calling a bank loan an asset because it brought in cash: the cash is the asset, the loan is the liability.
The business entity concept says the business is kept separate from its owner, even for a sole trader. That is why Maya’s own $10,000 shows up as equity, not as a debt the business has forgotten about.
✏️ Quick check · 1 of 8
Classify it
Which of these is an asset?
Assets are things the business owns or controls.
✏️ Quick check · 2 of 8
Classify it
Accounts payable is:
Payable means the business has to pay it.
✏️ Quick check · 3 of 8
Effect
The business buys a computer for $1,200 cash. What happens to total assets?
Two assets change, in opposite directions.
✏️ Quick check · 4 of 8
Effect
The owner takes $500 from the business bank account for personal use. What happens?
Think of the business entity concept.
✍️ Type your answer · 5 of 8
A business has assets of $50,000 and liabilities of $18,000.
What is its equity?
Enter a whole number, without commas or the $ sign.
$
Equity = Assets − Liabilities.
✍️ Type your answer · 6 of 8
A shop has equity of $25,000 and liabilities of $15,000.
What are its total assets?
Enter a whole number, without commas or the $ sign.
$
Assets = Liabilities + Equity.
✍️ Type your answer · 7 of 8
A business starts the month with assets of $20,000 and liabilities of $8,000. It makes a profit of $3,000 and the owner takes no drawings.
What is equity at the end of the month?
Enter a whole number, without commas or the $ sign.
$
Find opening equity first, then add the profit.
✍️ Type your answer · 8 of 8
Maya’s bakery has assets of $15,800. She now repays $2,000 of the bank loan in cash.
What are total assets after the repayment?
Enter a whole number, without commas or the $ sign.
$
Paying a debt reduces an asset and a liability.
📝 Lesson quiz · 5 questions
0 / 5
Re-read the lesson, then give it another go.
Question 1 of 5
The accounting equation is:
Question 2 of 5
Money customers owe the business is called:
Question 3 of 5
A profit for the year will:
Question 4 of 5
Buying goods on credit increases:
Question 5 of 5
The idea that the business is separate from its owner is the:
Lesson 2 · Bookkeeping
✍️ Debits, Credits & Double Entry
Bookkeepers record every transaction twice: once as a debit and once as a credit. The two sides always add up to the same amount.
✍️ Double entry in one rule
Each account is drawn as a T-account: the left side is the debit (Dr) side and the right side is the credit (Cr) side. Debit and credit just mean left and right, not good or bad.
Remember DEALER:
Drawings, Expenses, Assets increase with a debit.
Liabilities, Equity, Revenue increase with a credit.
The opposite side decreases them. In every entry, total debits = total credits.
🖼️ See it
📝 Worked entries
Paid rent of $1,200 from the bank
Dr Rent expense 1,200
Cr Cash 1,200
Did $2,000 of work for a client, invoice not yet paid
Dr Accounts receivable 2,000
Cr Service revenue 2,000
Bought equipment for $4,000: $1,000 cash, the rest on a loan
Dr Equipment 4,000
Cr Cash 1,000
Cr Loan payable 3,000
The last one is a compound entry: one debit, two credits, but the totals still match (4,000 = 1,000 + 3,000).
📏 Balancing a T-account
Add up each side. The balance is the difference, and it sits on the bigger side. Asset and expense accounts normally have debit balances; liability, equity and revenue accounts normally have credit balances.
Cash
Dr Cr
Capital 5,000 Rent 1,200
Sales 2,500 Supplies 800
--------------- ---------------
Total 7,500 Total 2,000
Balance = 7,500 − 2,000 = 5,500 debit
Common mistake. Thinking a credit to cash means money came in. On the business’s own books, cash coming in is a debit; your bank statement shows it the other way round because it is the bank’s view.
✏️ Quick check · 1 of 8
Rule
An increase in an asset is recorded as a:
DEALER: D-E-A go up with a debit.
✏️ Quick check · 2 of 8
Rule
Which account normally has a credit balance?
L-E-R go up with a credit.
✏️ Quick check · 3 of 8
Entry
The business pays a $300 electricity bill in cash. The correct entry is:
Which account rises, which falls?
✏️ Quick check · 4 of 8
Entry
A customer pays $900 they already owed. The entry is:
Revenue was already recorded when the invoice was sent.
✏️ Quick check · 5 of 8
Entry
The owner invests $8,000 into the business bank account. The credit side is:
Where does the owner’s claim go?
✍️ Type your answer · 6 of 8
A cash T-account has debits of $5,000 and $2,500 and credits of $1,200 and $800.
What is the balance on the account?
Enter a whole number, without commas or the $ sign.
$
Total each side and subtract.
✍️ Type your answer · 7 of 8
Equipment costing $6,500 is bought with $2,000 cash and the rest on a loan.
How much is credited to Loan payable?
Enter a whole number, without commas or the $ sign.
$
Debits must equal credits.
✍️ Type your answer · 8 of 8
An accounts payable T-account has a credit of $7,200 (purchases) and debits of $3,000 and $1,500 (payments).
What is the credit balance still owed?
Enter a whole number, without commas or the $ sign.
$
Payments reduce a liability on the debit side.
📝 Lesson quiz · 5 questions
0 / 5
Re-read the lesson, then give it another go.
Question 1 of 5
In a T-account the left side is the:
Question 2 of 5
Expenses increase with a:
Question 3 of 5
In every journal entry:
Question 4 of 5
Selling goods for cash is recorded as:
Question 5 of 5
An entry with one debit and two credits is called:
Lesson 3 · Bookkeeping
📚 Journals, Ledgers & the Trial Balance
Transactions travel through a set path: from a receipt or invoice, into the journal, into the ledger, and finally into a trial balance that checks the books add up.
📚 The accounting cycle
Source documents: invoices, receipts, bank statements, payslips.
Journal (book of prime entry): each transaction in date order, with the accounts, the debit, the credit and a short narration.
Ledger: each journal line is posted to its account (Cash, Sales, Rent…).
Trial balance: a list of every ledger balance; total debits should equal total credits.
Adjustments (Lesson 6), then the financial statements, then closing the revenue and expense accounts for the new period.
Most firms do this in software such as Xero, QuickBooks or Sage, but the software follows exactly these steps, and you need to understand them to spot its mistakes.
🖼️ See it
🧮 A trial balance
Trial balance at 31 March Dr Cr
Cash 8,000
Accounts receivable 2,000
Equipment 6,000
Accounts payable 3,000
Owner’s capital 10,000
Service revenue 7,000
Rent expense 1,500
Wages expense 2,500
------ ------
Totals 20,000 20,000
If the totals differ, find the difference and look for an amount that size (or half that size: a figure entered on the wrong side moves the totals by twice its value).
🔍 What a trial balance cannot catch
A trial balance that agrees is not proof the books are right. These errors leave it balanced:
Omission: the transaction was never recorded.
Commission: the right type of account but the wrong one (posted to Customer A instead of Customer B).
Principle: the wrong type of account (equipment recorded as an expense).
Original entry: the wrong amount on both sides.
Complete reversal: debit and credit swapped.
Compensating errors: two mistakes that cancel out.
Good habit. Reconcile key accounts to outside evidence every month: the bank to the bank statement, receivables to customer statements, payables to supplier statements.
✏️ Quick check · 1 of 8
Order
Where is a transaction recorded first?
Prime means first.
✏️ Quick check · 2 of 8
Purpose
The main purpose of a trial balance is to:
Think of the word balance.
✏️ Quick check · 3 of 8
Errors
A $400 repair was posted to the Equipment account instead of Repairs expense. This is an error of:
Was it the wrong type of account, or the right type?
✏️ Quick check · 4 of 8
Errors
Which error would make the trial balance totals disagree?
Which one affects only one side?
✍️ Type your answer · 5 of 8
A trial balance has these debit balances: Cash 8,000, Receivables 2,000, Equipment 6,000, Rent 1,500, Wages 2,500.
What is the debit total?
Enter a whole number, without commas or the $ sign.
$
Add the five balances.
✍️ Type your answer · 6 of 8
A trial balance shows debits of $45,600. The credits are Payables 4,600, Loan 10,000, Revenue 18,000 and Capital.
What must Capital be for it to balance?
Enter a whole number, without commas or the $ sign.
$
Credits must total 45,600.
✍️ Type your answer · 7 of 8
Debit total is $31,250 and credit total is $30,850. A single amount was entered on the debit side instead of the credit side.
What was that amount?
Enter a whole number, without commas or the $ sign.
$
Halve the difference.
✏️ Quick check · 8 of 8
Software
Accounting software has posted an invoice to the wrong customer. What kind of error is it?
Same class of account, different person.
📝 Lesson quiz · 5 questions
0 / 5
Re-read the lesson, then give it another go.
Question 1 of 5
The book of prime entry is the:
Question 2 of 5
Posting means:
Question 3 of 5
If a trial balance agrees, the books are:
Question 4 of 5
Which is a source document?
Question 5 of 5
Two mistakes that cancel each other out are:
Lesson 4 · Financial statements
📈 The Income Statement
The income statement (profit and loss account) shows whether the business made a profit over a period, and how.
📈 From sales to net profit
Revenue (sales) − cost of goods sold (COGS) = gross profit
Profit before tax − tax = net profit (the “bottom line”)
COGS = opening inventory + purchases − closing inventory. It counts only the stock actually sold in the period.
🖼️ See it
🧮 Worked example: a gift shop
Sales revenue 120,000
Opening inventory 10,000
Purchases 70,000
Closing inventory (8,000)
Cost of goods sold (72,000)
Gross profit 48,000
Wages 20,000 · Rent 9,000 · Utilities 3,000
Operating expenses (32,000)
Operating profit 16,000
Interest (1,000)
Profit before tax 15,000
Tax at 20% (3,000)
Net profit 12,000
📊 Margins: comparing like with like
Gross margin = gross profit ÷ revenue × 100. Here 48,000 ÷ 120,000 = 40%: the shop keeps 40 cents of every sales dollar before overheads.
Net margin = net profit ÷ revenue × 100. Here 12,000 ÷ 120,000 = 10%.
Read the trend. A falling gross margin points at buying prices or discounting; a steady gross margin with a falling net margin points at overheads.
Common mistakes. Putting the cost of new equipment in expenses (it is an asset, spread over its life by depreciation). Using purchases instead of COGS. Counting owner’s drawings as an expense.
✍️ Type your answer · 1 of 8
A business has sales of $80,000 and cost of goods sold of $50,000.
What is the gross profit?
Enter a whole number, without commas or the $ sign.
Enter a whole number, without commas or the $ sign.
$
Opening + purchases − closing.
✍️ Type your answer · 3 of 8
Revenue is $200,000 and gross profit is $70,000.
What is the gross margin, in %?
Enter an exact answer, without rounding.
%
Gross profit ÷ revenue × 100.
✍️ Type your answer · 4 of 8
Gross profit is $48,000. Expenses: wages $20,000, rent $9,000, utilities $3,000. Interest is $1,000.
What is profit before tax?
Enter a whole number, without commas or the $ sign.
$
Take off all expenses and the interest.
✍️ Type your answer · 5 of 8
A business with revenue of $250,000 makes a net profit of $20,000.
What is its net margin, in %?
Enter an exact answer, without rounding.
%
Net profit ÷ revenue × 100.
✏️ Quick check · 6 of 8
Classify it
Which item belongs in operating expenses?
The van is an asset; the loan is a liability.
✏️ Quick check · 7 of 8
Analyse
Gross margin stayed at 40% but net margin fell from 12% to 7%. The most likely cause is:
Which part of the statement changed?
✏️ Quick check · 8 of 8
Analyse
COGS uses closing inventory because:
Matching principle.
📝 Lesson quiz · 5 questions
0 / 5
Re-read the lesson, then give it another go.
Question 1 of 5
Gross profit is:
Question 2 of 5
The income statement covers:
Question 3 of 5
Net margin of 10% means:
Question 4 of 5
Another name for the income statement is:
Question 5 of 5
Which is NOT an expense?
Lesson 5 · Financial statements
🏦 Balance Sheet & Cash Flow
The balance sheet is a snapshot of what the business owns and owes on one date. The cash flow statement explains why the bank balance changed.
🏦 The balance sheet
Also called the statement of financial position. It is the accounting equation laid out in full:
Non-current assets: kept for more than a year (buildings, vehicles, equipment).
Current assets: cash, or will become cash within a year (inventory, receivables, bank).
Current liabilities: due within a year (payables, overdraft, tax owed).
Non-current liabilities: due after a year (long-term loans).
Equity: capital + retained profits − drawings.
🖼️ See it
🖼️ See it
💧 Liquidity ratios
Working capital = current assets − current liabilities. It is the cushion for paying day-to-day bills.
Current ratio = current assets ÷ current liabilities. Around 1.5 to 2 is often comfortable; below 1 is a warning sign.
Quick (acid-test) ratio = (current assets − inventory) ÷ current liabilities. It leaves out stock, which may be slow to sell.
Inventory 9,000 · Receivables 11,000 · Cash 10,000 → current assets 30,000
Payables 12,000 · Tax owed 3,000 → current liabilities 15,000
Working capital = 30,000 − 15,000 = 15,000
Current ratio = 30,000 ÷ 15,000 = 2
Quick ratio = (30,000 − 9,000) ÷ 15,000 = 1.4
💵 Cash flow: profit is not cash
The cash flow statement sorts every movement of cash into three groups:
Operating: cash from customers, paid to suppliers and staff.
Investing: buying or selling long-term assets.
Financing: loans received or repaid, owner investment, drawings or dividends.
Why a profitable business can run out of cash. Sales on credit count as revenue before the cash arrives, stock is paid for before it is sold, and loan repayments and equipment purchases use cash without being expenses. Watch receivables and inventory, not only profit.
✏️ Quick check · 1 of 8
Classify it
A five-year bank loan is a:
Owed or owned? Within a year or not?
✏️ Quick check · 2 of 8
Classify it
Which is a current asset?
Will it turn into cash within a year?
✍️ Type your answer · 3 of 8
Current assets are $42,000 and current liabilities are $28,000.
What is the working capital?
Enter a whole number, without commas or the $ sign.
$
Current assets − current liabilities.
✍️ Type your answer · 4 of 8
Current assets are $36,000 and current liabilities are $24,000.
What is the current ratio?
Enter a number such as 1.5.
Divide, do not subtract.
✍️ Type your answer · 5 of 8
Current assets $50,000 including inventory of $18,000. Current liabilities $40,000.
What is the quick ratio?
Enter a number such as 0.8.
Take inventory out first.
✏️ Quick check · 6 of 8
Cash flow
Buying a new machine for cash appears under:
Is it a day-to-day cost, an asset or funding?
✏️ Quick check · 7 of 8
Cash flow
A business takes out a $20,000 loan. This is a:
Where does funding go?
✍️ Type your answer · 8 of 8
Operating cash flow is +$18,000, investing −$10,000 and financing −$3,000. The opening bank balance was $4,000.
What is the closing bank balance?
Enter a whole number, without commas or the $ sign.
$
Add the net change to the opening balance.
📝 Lesson quiz · 5 questions
0 / 5
Re-read the lesson, then give it another go.
Question 1 of 5
The balance sheet shows the position:
Question 2 of 5
A current ratio below 1 suggests:
Question 3 of 5
The quick ratio leaves out:
Question 4 of 5
Repaying a loan is shown in the cash flow statement under:
Question 5 of 5
Net assets on the balance sheet equal:
Lesson 6 · Period end
🛠️ Adjustments & Depreciation
At the end of each period the books are adjusted so that income and costs land in the period they belong to, not the period the cash moved.
🧩 The matching (accruals) principle
Revenue is recorded when it is earned and expenses when they are incurred, whatever the date of payment. Four common adjustments:
Accrued expense: used but not yet paid (December electricity billed in January). Dr Expense, Cr Accruals (liability).
Prepaid expense: paid now for a later period (a year of insurance). The unused part is an asset: Dr Prepayments, Cr Expense.
Accrued revenue: work done, not yet invoiced. Dr Receivables, Cr Revenue.
Deferred revenue: cash received before the work is done. It is a liability until earned.
Insurance of $12,000 paid on 1 October for 12 months; year ends 31 December
Used: Oct, Nov, Dec = 3 months × 1,000 = 3,000 expense this year
Unused: 9 months × 1,000 = 9,000 prepayment (asset)
🖼️ See it
📉 Depreciation
A non-current asset is used up over several years, so its cost is spread over its useful life.
Straight-line: (cost − residual value) ÷ useful life, the same charge every year.
Reducing balance: a fixed % of the remaining book value each year, so the charge is biggest at the start. Suits vehicles and computers that lose value fast.
Van: cost 30,000, residual value 6,000, life 4 years
Straight-line: (30,000 − 6,000) ÷ 4 = 6,000 per year
Book value: 24,000 → 18,000 → 12,000 → 6,000
Reducing balance at 25%:
Year 1: 30,000 × 25% = 7,500 → book value 22,500
Year 2: 22,500 × 25% = 5,625 → book value 16,875
💡 On the job
Depreciation is not a cash payment. The cash left when the van was bought. Depreciation only moves the cost into the income statement a year at a time (Dr Depreciation expense, Cr Accumulated depreciation).
Common mistakes. Forgetting to take off residual value. Charging reducing-balance % on the original cost every year. Missing year-end accruals for bills that arrive after the year end.
✍️ Type your answer · 1 of 8
A machine costs $18,000, has a residual value of $3,000 and a useful life of 5 years.
What is the straight-line depreciation per year?
Enter a whole number, without commas or the $ sign.
$
Take off the residual value first.
✍️ Type your answer · 2 of 8
The same machine ($18,000, $3,000 a year depreciation).
What is its book value after 2 years?
Enter a whole number, without commas or the $ sign.
$
Cost − accumulated depreciation.
✍️ Type your answer · 3 of 8
A laptop costs $2,000 and is depreciated at 40% reducing balance.
What is the depreciation charge in year 2?
Enter a whole number, without commas or the $ sign.
$
Apply the % to the book value at the start of year 2.
✍️ Type your answer · 4 of 8
Rent of $6,000 is paid on 1 November for six months. The year ends on 31 December.
How much is the prepayment at the year end?
Enter a whole number, without commas or the $ sign.
$
Find the monthly cost first.
✍️ Type your answer · 5 of 8
The December electricity bill of $450 arrives on 10 January.
How much should be accrued as an expense for the year to 31 December?
Enter a whole number, without commas or the $ sign.
$
When was it used, not when was it paid?
✏️ Quick check · 6 of 8
Adjust
A client pays $3,000 in advance for work to be done next year. At year end it is:
Has it been earned yet?
✏️ Quick check · 7 of 8
Choose
Which method suits an asset that loses most of its value early?
Which gives the biggest first-year charge?
✏️ Quick check · 8 of 8
Entry
The depreciation entry is:
Expense up, asset value down.
📝 Lesson quiz · 5 questions
0 / 5
Re-read the lesson, then give it another go.
Question 1 of 5
The matching principle records expenses when they are:
Question 2 of 5
An insurance payment that covers next year is a:
Question 3 of 5
Straight-line depreciation gives:
Question 4 of 5
Depreciation reduces:
Question 5 of 5
Wages earned by staff on 31 December but paid in January are a:
Lesson 7 · Everyday tasks
🧾 Bank Reconciliation, Payroll & Sales Tax
Three jobs a bookkeeper does every month: proving the cash book agrees with the bank, paying staff correctly, and working out the sales tax owed.
🏦 Bank reconciliation
The business’s cash book and the bank statement rarely show the same balance on the same day. Two kinds of difference:
Timing differences (adjust the bank side): deposits in transit (paid in, not yet on the statement) and outstanding cheques/payments (sent, not yet cleared).
Items the business did not know about (adjust the cash book): bank charges, interest, direct debits, and customer payments that bounced (dishonoured).
Bank statement balance 5,400
+ deposit in transit 1,200
− outstanding cheque (900)
Adjusted bank balance 5,700
Cash book balance 5,620
− bank charges (40)
+ interest received 120
Adjusted cash book 5,700 ✓ agrees
🖼️ See it
🖼️ See it
👩💼 Payroll basics
Gross pay = hours × rate (+ overtime, bonuses, commission). Net pay = gross pay − deductions: income tax, social-security contributions, pension and any other agreed deductions.
The employer also pays its own costs on top (employer social-security and pension contributions), so the cost of an employee is more than their gross pay.
🧾 Sales tax and VAT
With a value-added tax (VAT or GST), a registered business charges output tax on its sales and reclaims input tax on its purchases. It pays the difference to the tax authority.
Rates and rules depend on the country (and in the USA, sales tax is set by each state and charged only at the final sale). Always check the current local rules before filing; the method here is the one to learn.
Common mistakes. Recording VAT collected as revenue (it belongs to the tax authority: it is a liability). Adjusting the bank statement for bank charges instead of the cash book.
✍️ Type your answer · 1 of 8
Bank statement balance $3,200. Deposit in transit $700. Outstanding cheque $450.
What is the adjusted bank balance?
Enter a whole number, without commas or the $ sign.
$
Add deposits in transit, take off outstanding payments.
✍️ Type your answer · 2 of 8
Cash book balance $2,980. The bank statement shows bank charges of $30 and a direct debit of $120 not yet in the cash book.
What is the adjusted cash book balance?
Enter a whole number, without commas or the $ sign.
$
Both items reduce the cash book.
✏️ Quick check · 3 of 8
Which side
A bank charge of $25 appears on the statement. Where do you record it?
Who needs to catch up?
✏️ Quick check · 4 of 8
Which side
A cheque you sent a supplier has not cleared yet. In the reconciliation it is:
It is a timing difference.
✍️ Type your answer · 5 of 8
An employee works 38 hours at $20 an hour, plus 4 overtime hours at time and a half.
What is the gross pay?
Enter a whole number, without commas or the $ sign.
$
Overtime rate = 1.5 × normal rate.
✍️ Type your answer · 6 of 8
Gross pay is $1,500. Deductions are income tax $210, social security $90 and pension $75.
What is the net pay?
Enter a whole number, without commas or the $ sign.
$
Add all the deductions first.
✍️ Type your answer · 7 of 8
In a quarter, output VAT is $14,500 and input VAT is $9,200.
How much VAT is payable?
Enter a whole number, without commas or the $ sign.
$
Output − input.
✍️ Type your answer · 8 of 8
A product sells for $240 including 20% VAT.
How much of that price is VAT?
Enter a whole number, without commas or the $ sign.
$
Divide by 1.2 to find the price before VAT.
📝 Lesson quiz · 5 questions
0 / 5
Re-read the lesson, then give it another go.
Question 1 of 5
A deposit in transit is:
Question 2 of 5
Interest received shown only on the bank statement should be:
Question 3 of 5
Net pay is:
Question 4 of 5
VAT collected from customers is a:
Question 5 of 5
VAT payable equals:
Final Exam
🏆 14-Question Final Exam
Questions from every lesson in this course. Pick an answer for each one, then hit Check My Answers.
0 / 14
💪 Keep practicing — go back through the lessons and retake the quiz!
Q1 · The Accounting Equation
Assets are $90,000 and equity is $55,000. Liabilities are:
Q2 · The Accounting Equation
Owner’s drawings:
Q3 · Debits, Credits & Double Entry
Which entry records buying stock on credit?
Q4 · Debits, Credits & Double Entry
Which account normally has a debit balance?
Q5 · Journals, Ledgers & the Trial Balance
Posting a whole transaction with the debit and credit swapped is an error of:
Q6 · Journals, Ledgers & the Trial Balance
The trial balance is prepared from:
Q7 · The Income Statement
Sales $60,000, COGS $36,000. Gross margin is:
Q8 · The Income Statement
Opening inventory 5,000, purchases 30,000, closing inventory 7,000. COGS is:
Q9 · Balance Sheet & Cash Flow
Current assets 24,000, current liabilities 16,000. The current ratio is:
Q10 · Balance Sheet & Cash Flow
A business can be profitable and still run out of cash because:
Q11 · Adjustments & Depreciation
Equipment cost 10,000, residual 2,000, 4-year life. Straight-line depreciation per year is:
Q12 · Adjustments & Depreciation
Cash received before the work is done is:
Q13 · Bank Reconciliation, Payroll & Sales Tax
In a bank reconciliation, a dishonoured customer cheque is:
Q14 · Bank Reconciliation, Payroll & Sales Tax
Output VAT 8,000 and input VAT 9,500 means the business: