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Quiz Over Financial Terms
Answers!
1. What document shows profit and loss over a
period of time?
Income Statement
2. Which document gives a snapshot of assets,
liabilities, and owner’s equity?
Balance Sheet
3. Define Asset
Any item of value
4. Define Liability
A business debt
5. What is the Balance Sheet Equation?
Assets- Liabilities = Owner’s Equity
6. What does COGS Stand for?
Cost of Goods Sold
7. How are Fixed Operating Costs Different than
Variable Operating Costs?
 Fixed costs do not change whereas
variable costs do
8. Businesses Lower Prices all the Time. How are
they able to do this?
 Variable costs change, prices get reduced
 Take a loss (also called a “loss leader”)
 COGS goes down
 Vendor prices are reduced, thus costs go down
Sue’s Sandwich Shoppe
 a. Variable Costs- $600 for sandwich
supplies and soda and $1500 for salaries
 c. Fixed Costs- $300 for rent, $60 for
utilities and $50 for insurance
Sue’s Sandwich Shoppe (cont)
 b. Cost of Goods Sold- $600 for labor and $1500 for
salaries = $2100
Sue’s Sandwich Shoppe (cont)
 d. Sue’s EOU- $2100/300 customers = $7
Sue’s Sandwich Shoppe (cont)
 e. How much should she keep in bank? $3000 in
sales- $2100 in COGS= $900 in profit. Safe
savings is half again as much so half of $900 is
$450. She should put $450 in bank.