AC 210 - LearnSmart Ch. 1

The unit-of-measure assumption states that ______.

results of business activities should be reported in an appropriate monetary unit

40. Which of the following are reported on a balance sheet? (Check all that apply.)

retained earnings liabilities cash stockholders' equity assets

The heading of an income statement should include ______. (Select all that apply.)

the title "Income Statement"; the accounting period covered by the statement; the name of the business

32. Which of the following are found on a balance sheet? (Select all that apply.)

profits that have accumulated in the company over time

33. Retained earnings are ______. (Select all that apply.)

Increased by net income; decreased by dividends

29. Ace Electronics paid $4,000 of the $5,000 its employees had earned during the period. Ace Electronics should report Wages Expense of $5,000 on the income statement and Wages Payable of ______ on the balance sheet prepared in accordance with generally accepted accounting principles.

$4,000 - The amount owed, Wages Payable on the balance sheet, is the $5,000 incurred as an expense minus the $4,000 that has been paid.

38. Ace Electronics sold $5,000 of goods to customers of which $3,000 has been collected. Using accrual accounting, Ace Electronics should report revenues of ______.

$5,000

36. Ace Electronics had the following increases in the cash account during the month: $20,000 from owners for stock; $5,000 from sales to customers; and $15,000 borrowed from River Bank. Ace's revenue for the month was ______.

$5,000 - Reason: Sales are revenues. Owner contributions, Common Stock, are included in stockholders equity and loans are included in liabilities.

Match the definitions:

-Assets: Economic resources that will provide future benefit - amount of the company's resources -Liabilities: Creditors' claims to economic resources -Stockholders' equity: Owners' claims to economic resources -Revenues: Amounts earned by selling goods and services -Expenses: Amounts used to generate profits

28. The balance sheet reports ______.

-assets -liabilities and stockholders' equity at a specific point in time

52. Financial information is enhanced when it is ______. (Check all that apply.)

-comparable -understandable -timely -verifiable

Place the single-step income statement items in the proper order from top to bottom.

1) Revenues, 2) Expenses, 3) Net Income

A company's fiscal year end is a ______.

12-month period ending on a day other than December 31

Individual expenses are accumulated in separate____________.

Accounts

______ are used to accumulate and report the effects of each different business activity separately rather than combining the various types of activities together.

Accounts

Which of the following statements are true regarding the income statement? Income statements ______. (Select all that apply.)

Are sometimes called the statement of operations report Revenues - Expenses

The accounting equation is:

Assets = Liabilities + Equities

46. Which financial statement reports the financial position of the business at a point in time?

Balance sheet

Which of the following are financial statements? (Check all that apply.)

Balance sheet, Statement of RE, Income Statement, Statement of CF

37. Place the balance sheet line items in the proper order from top to bottom.

Cash Supplies Equipment Accounts payable Common stock Retained earnings

42. The order in which liabilities are reported on the balance sheet is based on when the liability is ______.

Expected to be paid or settled

39. The order in which assets are reported on the balance sheet is based on when the asset is ______.

Expected to be used or turned into cash

56. Which of the following characteristics are needed in order for information to be useful? (Check all that apply.)

Faithful representation; relevance

T or F: Financial statements must have a year end of December 31.

False - Financial statements may be prepared for any 12-month period

T or F: Net income equals the net amount of cash collected during the accounting period.

False - Net income does not equal cash collected because some revenues are collected and some expenses are paid in a later accounting period. Cash can increase from other activities, such as borrowing or owner contributions.

51. True or false: U.S. GAAP and IFRS have completely different goals.

False - Reason: The main goal of both GAAP and IFRS is to ensure that companies produce useful information for capital providers to make decisions.

48. Cash Flows Provided by ______ Activities on the statement of cash flows reports the cash activity with stockholders and creditors such as banks.

Financing

49. The IASB developed accounting rules that differ from US GAAP that many countries require companies to follow called

International financial reporting standards

43. Cash Flows from (used in) ________ Activities on the statement of cash flows reports the cash activity from the buying and selling of productive resources such as land, buildings and equipment.

Investing

35. Which of the following statements are true about the balance sheet. (Select all that apply.)

It reports the economic resources and claims on those resources.,It is sometimes called the statement of financial position.It reports the assets, liabilities and stockholders' equity at a point in time.

Which of the following are assets?

Land, cash, equipment, supplies

________ are measurable amounts that the company owes to creditors.

Liabilities

54. ______ have primary responsibility for following GAAP.

Managers/ management

An income statement includes which of the following item(s). (Select all that apply.)

Net Income, Expenses, Revenues

Profits that have accumulated in the company over time are _______ earnings.

Retained

Select all of the line-items found on a statement of retained earnings for the month ended September 30.

Retained Earnings Sept 1 Add: net Income Subtract: Dividends Retained Earnings Sept 30

34. Which of the following are reported on a balance sheet? (Check all that apply.)

Stockholders' equity; retained earnings; liabilities; assets; cash

T or F: A fiscal year can end on a date other than December 31. A calendar year ends on December 31.

True - Reason: A company will typically pick a fiscal year end that is the start of its slow business period. It is not required to pick a calendar year end of December 31.

Liberty Inc., a US company, sold merchandise to Belle, a French company, for 10,000 euros. In Liberty's US financial statements, this sale should be reported in ______.

US dollars

The 4 financial statements are:

a. Income statement b. Statement of Retained Earnings c. Balance Sheet d. Statement of Cash Flows

55. The main goal of both U.S. GAAP and IFRS is to ______.

ensure that companies produce useful information for capital providers

30. Accounts are ______.

used to accumulate and report the effects of each different business activity

A company owns an economic resource that will provide it with future benefits. This economic resource is ______.

An Asset

44. Which of these would be reported in the financing activities section of the statement of cash flows? (Check all that apply.)

Cash dividends paid to stockholders Cash paid to reduce the principal borrowed from banks Cash borrowed from the bank

47. Which of these would be reported as Cash Flows from (used in) Investing Activities? (Check all that apply.)

Cash paid to buy equipment Cash paid to build a new corporate headquarters

An owner gives $5000 cash to his company in exchange for stock. This will increase the company's ______. (Check all that apply.)

Common Stock, Cash, Total Stockholders' equity

Which of the following are part of stockholders' equity? (Select all that apply.)

Common Stock, Retained Earnings

Mauricio invested $30000 in Pizza Aroma in exchange for its stock. Pizza Aroma now has a balance in its ______ account

Common stock

T or F: The order of the heading of an income statement indicates the name of the statement first, the period of time covered, and the name of the company third.

False -- Reason: The name of the company is first, followed by the statement name, and then the period of time covered by the income statement.

50. Borrowing from a bank is a _____.

Financing activity

31. Which of the following are found on a balance sheet? (Select all that apply.)

Notes payable, Equipment, Common Stock, Supplies

Which of the following represents the amount of owners' claim that the owners contributed directly to the company? (Check all that apply.)

Paid-in Capital AND common stock

An amount owed to a supplier for prior purchases on account is an Account ______ which is a(n) ______ account.

Payable; liability

45. Operating activities include the ______.

Payment of wages

53. The US Financial Accounting Standards Board is working with the International Accounting Standards Board to ______. (Check all that apply.)

make financial statements more comparable-eliminate differences in financial reporting among countries

41. The ______ activities section on the statement of cash flows reports the activities directly related to running the business to earn profit.

operating