Book 1 - Chapter 1

Multiple Choice
1.	b
2.	d
3.	a
4.	b	“Revenue” is a word that confuses many people. Usually they think revenue is the same thing as wealth (like cash, or some other valuable thing). Revenue is not a thing . Revenue is a measure of what customers paid for something the business sold. Revenue confirms the added value of what the business is offering.
5.	d	A business does not really know the total added value created by consuming resources until a sale is made. Making a sale does not mean there is a profit.
6.	b	Expenses are resources that are used up in operations and reduce wealth. Whether or not expenses will add value depends on how the resources are used.
7.	c
8.	c
9.	a	Notice that (d) is incorrect because a business can be adding value and still have a loss. This is because it is not adding enough value!
10.	c	Customers do not want cookie prices increased because of resources consumed by waste and loss.

Learning Goal 1

SOLUTIONS

Learning Goal 1: Explain What a Business Is and What It Does

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Worthy & James Publishing is a provider of basic accounting books covering fundamental accounting principles, business accounting, and business math. Topics in financial accounting and business accounting covered include the balance sheet, the income statement, financial ratios, and bank reconciliation.