7. Which of the following is the correct way to determine the net profit, and what is the net
profit?
A. Subtract the total expenses from revenue; the net profit is $2,358.50.
B. Add the total expenses to the revenue; the net profit is $2,358.50.
C. Subtract the total expenses from revenue; the net profit is $1,079.72.
D. Add the total expenses to the revenue; the net profit is $1,0740.90.

8. What is the net profit you reported on the income statement in Exam Figure 3?
A. $2,917.97 C. $1,709.72
B. $1,838.25 D. $1,079.72

9. The assets section of the balance sheet should include
A. Cash C. Cash
Equipment—Store Equipment—Office
Equipment—Office Equipment—Store
Prepaid Insurance P. Woodsley, Capital
Insurance Expense Net Profit
B. Cash D. Cash
Equipment—Store Prepaid Insurance
Equipment—Office Equipment—Store
Supplies Expense Equipment—Office
P. Woodsley, Capital Supplies

10. The owner’s equity section of the balance sheet should appear as
A. Owner’s Equity C. Owner’s Equity
P. Woodsley, Capital Woodsley, Capital
Plus Net Profit Less Drawing
Less P. Woodsley, Drawing Plus Net Profit
Total Owner’s Equity Total Owner’s Equity
B. Owner’s Equity D. Owner’s Equity
P. Woodsley, Capital Less Drawing
Less Drawing Plus Net Profit
Net Profit Total Owner’s Equity

11. Which of the following best describes a closing entry?
A. It’s an entry made in the balance sheet to close out the assets.
B. It’s an entry made in the trial balance to show a final entry.
C. It’s an entry made in the general journal to close a temporary ledger account.
D. It’s an entry made in the general ledger to close a permanent ledger account