Check your understanding

Answer all 5 questions, then check your answers. You need 4 correct to pass and unlock your certificate. You can try as many times as you like.

Question 1 of 5Which equation is always true?

Assets = Liabilities − EquityRevenue = Assets + ExpensesAssets = Liabilities + EquityProfit = Assets − Revenue

Question 2 of 5A business buys equipment with cash. What happens?

Equipment goes up and cash goes downEquipment goes up and liabilities go upCash goes up and equity goes downExpenses go up and revenue goes down

Question 3 of 5Which type of account increases with a credit?

CashRevenueEquipmentAdvertising expense

Question 4 of 5You finish a $250 job and the client will pay next month. Under accrual accounting, when do you record the revenue?

When the client paysAt the end of the yearNow, when the work is doneNever, because no cash was received

Question 5 of 5Revenue is $570 and expenses are $200. What is the profit?

$770$370$200$2,490

You need 4 out of 5 to pass.