Accounting Chapter 1
Finney Company began the year by issuing $20,000 of common stock for cash. The company recorded revenues of $185,000, expenses of $160,000, and paid dividends of $10,000. What was Finney's net income for the year?
$25,000 (185000-160000
the right to receive money in the future is called
Account receivable
The liability created by a business when it purchases coffee beans and coffee cups on credit from suppliers is termed a(n)
Accounts payable
Which of the following is NOT a principal type of business activity?
Delivering
Benedict Company compiled the following financial information as of December 31, 2012: Revenues $280,000 Common stock 60,000 Equipment 80,000 Expenses 250,000 Cash 70,000 Dividends 20,000 Supplies 10,000 Accounts payable 40,000 Accounts receivable 30,000 Retained earnings, 1/1/12 150,000 Benedict's stockholders' equity on December 31, 2012 is
$220,000 (150000+280000-250000-20000+60000)
Elston Company compiled the following financial information as of December 31, 2012: Revenues $420,000 Common stock 90,000 Equipment 120,000 Expenses 375,000 Cash 105,000 Dividends 30,000 Supplies 15,000 Accounts payable 60,000 Accounts receivable 45,000 Retained earnings, 1/1/12 225,000 Elston's assets on December 31, 2012 are:
$285,000 (120000+105000+15000+45000)
If total liabilities decreased by $45,000 and stockholders' equity increased by $15,000 during a period of time, then total assets must change by what amount and direction during that same period?
$30,000 decrease (45000-15000)
Gilkey Corporation began the year with retained earnings of $155,000. During the year, the company issued $210,000 of common stock, recorded expenses of $600,000, and paid dividends of $40,000. If Gilkey's ending retained earnings was $165,000, what was the company's revenue for the year?
$650,000 (155000+X-600000-40000=165000, X=650000)
Jackson Company recorded the following cash transactions for the year: Paid $135,000 for salaries. Paid $60,000 to purchase office equipment. Paid $15,000 for utilities. Paid $6,000 in dividends. Collected $225,000 from customers. What was jacksons net cash provided by operating activities?
$75,000 (225000-135000-15000)
Henson Company began the year with retained earnings of $350,000. During the year, the company recorded revenues of $500,000, expenses of $380,000, and paid dividends of $40,000. What was Henson's retained earnings at the end of the year?
430,000 (350000+500000-380000-40000)
The accounting equation may be expressed as:
Assets = (liability + SE)
Ending retained earnings for a period is equal to:
Beginning retained earnings + net income - dividends.
Borrowing money is an example of
Financing activity
To show how successfully your business performed during a period of time, you would report its revenues and expense in the..?
Income statement
Four major financial statements
Income statements, retained earnings statement, balance sheet, statement of cash flows
Which activities involve acquiring the resources to run the business?
Investing
Which activities involve putting the resources of the business into action to generate a profit?
Operating
Income statements:
Revenues and expenses
net income results when
Revenues exceed expenses
Statement of cash flows:
Shows where the cash comes in and where it goes out
Which of the following financial statements is divided into major categories of operating, investing, and financing activities?
The statement of cash flows
The retained earnings statement shows all of the following except
The time period following the one shown for the income statement
When expenses exceed revenues, which of the following is true?
a net loss results
balance sheet:
assets = liabilities + SE
dividends paid do what?
decrease retained earnings
The primary purpose of the statement of cash flows is to report
information about cash receipts and cash payments of a company.
If the retained earnings account increases from the beginning of the year to the end of the year, then
net income is greater than dividends
