Accounting Ch. 1
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"
