Accounting Ch. 1

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Revenues

Earned by selling goods or services to customers

Liabilities

The amounts owed by the business

Ace Electronics paid $4,000 of the $5,000 its employees had earning 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 and accepted accounting principles.

$1,000

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

- Subtract: Dividends - Retained Earnings, September 30 - Add: Net Income - Retained Earnings, September 1

Businesses earn profits by....

1) selling goods or services at more than the cost to deliver the goods and services 2) having revenues greater than expenses

Relevance

A feature of financial information that allows it to influence a decision

Stock Certificate

A legal document representing ownership in a corporation

Corporation

A separate legal entity whereby the owners are not personally liable for the debts of the business

The economic resource that a company owns that will provide it with future benefits

Asset

Which financial statement provides the information regarding the source of financing?

Balance Sheet

CPA

Certified Public Accountant

FASB

Financial Accounting Standards Board

Faithful Representation

Financial information that depicts the economic substance of business activities

Cash received from issuing stock

Financing (inflow)

Cash paid for dividends

Financing (outflow)

GAAP

Generally Accepted Accounting Principles

Which financial statement provides the information regarding profitability?

Income Statement

Which financial statement reports revenues and expenses?

Income Statement

Net income, as opposed to a net loss, causes retained earnings to ____.

Increase

IFRS

International Financial Reporting Standards

Cash received from selling equipment

Investing (inflow)

Cash paid to purchase land

Investing (outflow)

Primary goal of most companies

Make a profit

Cash collected from clients

Operating (inflow)

Cash paid to suppliers

Operating (outflow)

Which type of accountant is hired by a business as an employee and provides accounting services for that particular business?

Private Accountant

SEC

Securities and Exchange Commission

Which financial statement would report the business activities responsible for the change in cash?

Statement of Cash Flows

Which financial statement provides the information regarding the company's dividends?

Statement of Retained Earnings

Is the company financed mainly by creditors or stockholders?

Stockholders

Expenses

The costs of business necessary to earn revenues

Separate Entity

The financial reports of a business are assumed to include the results of only that business's activities

Assets

The resources owned by a business

Stockholders' Equity

The total amounts invested and reinvested in the business by its owners

Individual expenses are accumulated in separate ____.

accounts

The main goal of an accounting system is to ______.

capture information about a business so that it can be reported to decision makers

Heading of Balance Sheet

name of business, "At Dec. 31, 2020," title "Balance Sheet"

The heading of an income statement should include....

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


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