ACCN

For 2017, Spanos Corporation reported net income $26,000, net sales $400,000, and weighted-average shares outstanding 4,000. There were preferred dividends of $2,000. What was the 2017 earnings per share?

$6 because, earnings per share= net income - preferred dividends / by average shares outstanding

Coronado industries started the year with total assets of 318,000 and total liabilities of 258000. During the year the business recorder 631000 in revenues, and 334000 in expenses, and dividends of 61000. Stockholders equity at the end of the year was?

(assets- liabilities) + (revenues- expenses) - dividends= 296,000

partnership

A business in which two or more persons combine their assets and skills, better tax w high liability

Sole Proprietorship

A business owned by one person, simple and gives you complete control and complete liability but good taxation e

Statement of Cash Flows

A financial statement that provides financial information about the cash receipts and cash payments of a business for a specific period of time.

Income Statement

A financial statement that reports a company's revenues and expenses and resulting net income or net loss for a specific period of time.

Balance Sheet

A financial statement that reports assets, liabilities, and owner's equity on a specific date.

Retained Earnings Statement

A financial statement that summarizes the amounts and causes of changes in retained earnings for a specific time period.

General Ledger

A ledger that contains all asset, liability, stockholders' equity, revenue, and expense accounts.

Post-closing trial balance

A list of permanent accounts and their balances after a company has journalized and posted closing entries.

debt to assets ratio

A measure of solvency calculated as total liabilities divided by total assets. It measures the percentage of total financing provided by creditors.

Worksheet

A multiple-column form that companies may use in the adjustment process and in preparing financial statements

Annual Report

A report prepared by corporate management that presents financial information including financial statements, a management discussion and analysis section, notes, and an independent auditor's report.

Generally Accepted Accounting Principles (GAAP)

A set of accounting standards that have substantial authoritative support, that guide accounting professionals.

Double-entry system

A system that records the two-sided effect of each transaction in appropriate accounts.

Cash Basis Accounting

Accounting basis in which a company records revenue only when it receives cash and an expense only when it pays cash.

International Financial Reporting Standards (IFRS)

Accounting standards, issued by the IASB, that have been adopted by many countries outside of the United States.

Which statement about an account is true?

An account is an individual accounting record of increases and decreases in specific asset, liability, and stockholders equity items

International Accounting Standards Board (IASB)

An accounting standard-setting body that issues standards adopted by many countries outside of the United States.

Economic Entity Assumption

An assumption that every economic entity can be separately identified and accounted for.

Monetary Unit Assumption

An assumption that requires that only those things that can be expressed in money are included in the accounting records.

Periodicity Assumption

An assumption that the economic life of a business can be divided into artificial time periods.

account

An individual accounting record of increases and decreases in specific asset, liability, stockholders' equity, revenue or expense items.

Basic Accounting Equation

Assets = Liabilities + Stockholders' Equity

current assets

Assets that companies expect to convert to cash or use up within one year or the operating cycle, whichever is longer.

Which accounts normally have debit balances?

Assets, dividends, and expenses

Which financial statement reports assets, liabilities, and stock holders equity?

Balance sheet

Corporation

Business that is a separate legal entity and owned by stockholders. Higher tax w/less liability and easier to raise funds

The correct order of presentation in a classified balance sheet for the following current assets is:

Cash, Accounts receivable, inventory, prepaid insurance

Which one of these statements about the accrual basis of accounting is false?

Companies record revenue only when they receive cash and record expense only when they pay out cash

In a classified balance sheet, assets are usually classified as:

Current assets, long-term investments, property plant, and equipment; and intangible assets

What decreases liabilities and increases assets?

Debits

Paying an account payable with cash affects the components of the accounting equation in the following way:

Decreases assets and liabilities

What does not appear on the income statement?

Dividends!

Closing entries

Entries at the end of an accoutning

Adjusting entries

Entries made at the end of an accounting period to ensure that the revenue recognition and expense recognition principles are followed.

What are some events recorded in the accounting record?

Equipment purchased on account, a cash investment made into the business, paying dividends to stock holders, NOT terminating or hiring an employee

Which principle dictates that expenses be recorded with revenues

Expense recognition principle

U.S. standards are developed by the

FASB

During 2017, Gibson Company assets decreased $50,000 and its liabilities decreased $90,000. Its stockholders' equity

Increased 40,000

quality of earnings

Indicates the level of full and trans-parent information that a company provides to users of its financial statements

External Users

Investors, creditors, taxing authorities, customers, labor unions, Regulatory agencies

Internal Users

Managers who plan, organize, and run a business. Finance, marketing, and Human Resources

Notes to the financial statements

Notes clarify information presented in the financial statements and provide additional detail.

Current Liabilities

Obligations that a company expects to pay within the next year or operating cycle, whichever is longer.

Creditors

People who lend money

Each of the following is a major type of adjusting entry:

Prepaid expenses, accrued, accrued expenses

Which is an advantage of corporations relative to partnerships and sole proprietorships?

Reduced legal liability for investors

Genesis Company buys a $900 machine on credit. This transaction will affect the:

The balance sheet because when equipment is purchased on credit, assets are increased and liabilities are increased

The Periodicity Assumption

The economic life of a business can bed divided into artificial time periods

Accounting

The information system that identifies, records, and communicates the economic events of an organization to interested users.

useful life

The length of service of a productive asset

earnings management

The planned timing of revenues, expenses, gains, and losses to smooth out bumps in net income

Financial Accounting Standards Board (FASB)

The primary accounting standard-setting body in the United States.

Revenue Recognition Principle

The principle that companies recognize revenue in the accounting period in which the performance obligation is satisfied.

Expense Recognition Principle

The principle that matches expenses with revenues in the period when the company makes efforts to generate those revenues.

chart of accounts

a list of a company's accounts

Adjusted trial balance

a list of accounts and their balances after all adjustments have been made

Trial Balance

a list of accounts and their balances at a given time

A company has purchased a tract of land. It expects to build a production plant on the land in approximately 5 years. During the 5 years before construction, the land will be idle. The land should be reported as:

a longterm investment

Income Summary

a temporary account used in closing revenue and expense accounts

note payable

a written promise to pay a creditor a certain amount in the future

Contra asset account

an account that is offset against an asset account on the balance sheet

fiscal year

an accounting period that is one year long

journal

an accounting record in which transactions are initially recorded in chronological order

Reversing entry

an entry made at the beginning of the next accounting period; the exact opposite of the adjusting entry made in the previous period

fair value principle

assets and liabilities should be reported at fair value (the price received to sell an asset or settle a liability)

a balance sheet shows:

assets, liabilities, stockholders equity

Permanent Accounts

balance sheet accounts whose balances are carried forward to the next accounting period

debt financing

borrowing money

current assets are listed:

by order of expected conversion to cash

unearned revenues

cash received and a liability recorded before services are performed

What increases revenues?

credits

Queenan Company computes depreciation on delivery equipment at $1,000 for the month of June. The adjusting entry to record this depreciation is as follows:

debit depreciation expense by 1000 and credit accumulated depreciation equipment

The trial balance shows Supplies $1,350 and Supplies Expense $0. If $600 of supplies are on hand at the end of the period, the adjusting entry is:

debit supplies expense for 750 and credit supplies for 750

Assets are increased by?

debits

Bonds Payable

debt securities sold to investors that must be repaid at a particular date some years in the future

Adjustments for unearned revenues:

decrease liabilities and increase revenues

Adjusting entries are made to ensure that:

expenses are recognized in the period in which they are incurred, revenues are recorded in the period in which the performance obligation is satisfied, balance sheet and income statement accounts have correct balances at the end of an accounting period

prepaid expenses

expenses paid in cash before they are used or consumed

Are regulatory authorities considered internal or external users?

external

Three Business Activities

financing, investing, operating

Adjustments for accrued revenues:

increase assets and increase revenues.

The effects on the basic accounting equation of performing services for cash are to:

increase assets and increase stock holder's equity

The balance in retained earnings is not affected by:

issuance of common stock. It does show, dividends and net income/loss

equity financing

issuing shares of stock in exchange for cash

operating

making and selling goods or your services

Financing

obtaining funds or money capital to start and grow a business

Investing

purchasing resources, the company requires to operate AKA ASSETS. Ex: equipment, land, plant, inventory, supplies, or stocks and bonds

temporary accounts

revenue, expense, and dividend accounts whose balances a company transfers to Retained Earnings at the end of an accounting period

T account

the basic form of an account

Book value

the difference between the cost of a depreciable asset and its related accumulated depreciation

Ledger

the group of accounts maintained by a company

debit

the left side of an account: assets expenses and losses, equity, sales, and gains

General journal

the most basic form of journal

Journalizing

the procedure of entering transaction data in the journal

posting

the procedure of transferring journal entry amounts to the ledger accounts

Depreciation

the process of allocating the cost of an asset to expense over its useful life

credit

the right side of an account: dividends, revenues and liabilities

Accounting Information System

the system of collecting and processing transaction data and communicating financial information to decision-makers