Question

Which type of funding requires that the business owner share ownership with investors?
A.
Debt funding
B.
Reserve funding
C.
Equity funding
D.
Angel funding
Answer
In the accounting equation, assets are equal to which two things?
A.
Debits + equity
B.
Debits + accounts
C.
Liabilities + equity
D.
Liabilities + accounts
Answer
If you wanted to make sure a company has enough money available to pay its bills, which financial statement would be most helpful?
A.
Balance sheet
B.
Income statement
C.
Statement of owners' equity
D.
Cash flow statement
Answer
If your company uses accrual basis accounting, what do you need to pay special attention to?
A.
Money the company owes
B.
Money that is owed to the company
C.
Cash flow
D.
Revenue
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C. Equity funding

In equity funding, business owners sell a portion of their ownership in the company to investors in exchange for capital. This means that the investors now have a stake in the business.
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C. Liabilities + equity

The accounting equation states that Assets = Liabilities + Equity. This equation represents the relationship between a company's resources (assets) and the claims against those resources (liabilities and equity).
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D. Cash flow statement

The cash flow statement provides information about a company's inflows and outflows of cash during a specific period, which is crucial for assessing the company's ability to pay its bills and meet its financial obligations.
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D. Revenue

Under accrual basis accounting, revenue is recognized when it is earned, regardless of when the cash is actually received. This means that you need to pay special attention to when revenue is recorded, as it can impact financial statements and performance measurement even if the cash hasn't yet been received.