Practice Question

1. As of June 30, 2012, a business shows $300 in cash on the balance sheet. It also shows $200 in liabilities and $100 as equity. The income statement presents a loss of $80. The accounting books are closed. Which of the following statements is correct about this situation?

The balance sheet shows the loss of $80 as part of liabilities.
The balance sheet shows the loss of $80 as part of the equity calculations.
The balance sheet shows $300 in cash as part of liabilities.