Short MCQ exit ticket on balance sheet construction, retained earnings logic, and common misconceptions.
Exit Ticket: Balance Sheet and Retained Earnings Check
This short assessment checks your understanding of balance sheet construction, the accounting equation, retained earnings logic, and common classification errors. Answer carefully — these questions reflect the kinds of decisions you will need to make when building real financial statements.
Correctly sorting accounts into assets, liabilities, and equity — including tricky ones like Unearned Revenue and Prepaid Rent.
Calculating Ending RE from Beginning RE, Net Income, and Dividends. Understanding how the Income Statement feeds the Balance Sheet.
Verifying that Assets = Liabilities + Equity and diagnosing what goes wrong when it does not balance.
1. A company has the following: Cash $8,000, Equipment $20,000, Accounts Payable $5,000, Common Stock $10,000, and Retained Earnings $13,000. What are Total Assets?
2. Beginning Retained Earnings is $12,000. Net Income this period is $5,000. Dividends paid are $1,500. What is Ending Retained Earnings?
3. Which of these accounts would NOT appear on a Balance Sheet?
4. Unearned Revenue of $2,000 appears on a company's trial balance. How should it be classified on the Balance Sheet?
5. A Balance Sheet shows Total Assets of $50,000 and Total Liabilities of $22,000. What must Total Equity be?
6. Why does Accumulated Depreciation appear as a negative number on the Balance Sheet?
7. If a company's Balance Sheet does not balance (Assets ≠ Liabilities + Equity), what is the most likely cause?
Exit Ticket Success
You have demonstrated mastery when you can correctly answer questions about:
- Classifying accounts into assets, liabilities, and equity
- Calculating Ending Retained Earnings from the roll-forward formula
- Explaining why revenue and expense accounts do not appear on the Balance Sheet
- Using the accounting equation to find missing values
- Identifying common errors like misclassifying Unearned Revenue