Accounting CH 1-4

Which of the following is the accounting equation?

Assets = Liabilities + Stockholders' Equity

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

Balance Sheet

The underlying rules of accounting the US are called _________ _________ ___________ principles.

generally accepted accounting

An initial public offering, IPO, is when a company ______.

issues shares that are traded on a stock exchange

Financial statements ______. (Select all that apply.)

may have a fiscal year end other than December 31, may be prepared more than once a year

What information appears on the statement of retained earnings?

net income dividends beginning balance of retained earnings ending balance of retained earnings

The unit-of-measure assumption states that ______.

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

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

retained

An income statement includes which of the following item(s).

revenues net income expenses

A corporation earns profits for its stockholders by ______.

selling goods at more than their cost, providing services at more than cost

Three common forms of business organizations include ______. (Select all that apply.)

sole proprietorship, partnership corporation

US GAAP are ______.

the accounting rules developed by the FASB for use in the United States

Accounts Receivable is ______.

the amount the company expects to collect for previous credit sales

The primary goal of most companies is

to make a profit

Accounts are ______.

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

Equation for income statement is

Revenue - Expenses = Net Income

The purpose of the balance sheet is to report the amount of ______.

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

The purpose of the balance sheet is to report the amount of ______. Multiple choice question.

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

Which financial statement reports the financial performance of the business during the current accounting period?

Income statement

Which of the following are the correct terms for the 3 activities found on the statement of cash flows?

Investing Financing Operating

A company started the month with $1000 of Retained Earnings. During the month, it had revenue of $4,500. it also distributed a dividend of $100 to its stockholders. The company's Retained Earnings at the end of the period equals $

1000+(5000-4500)-100=1400

Companies typically prepare ______ financial statements each accounting period.

4

Individual expenses are accumulated in separate

Accounts

Pizza Aroma delivered $500 of pizzas to the local high school, but hasn't received payment yet. Pizza Aroma will report ______.

Accounts Receivable of $500

Which of the following are true about the income statement?

Each major caption has an underlined subtotal, such as Total Expenses. A dollar sign appears only at the top and bottom of the column of numbers. Revenues are listed before expenses. Net Income has a double underline.

True or false: Financial statements must have a year end of December 31.

False

True or false: 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

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

Revenues Expenses Net Income

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

Statement of cash flows, Balance sheet, Statement of retained earnings, Income statement

Creditors would like a company that owes them money to have a large positive cash flow from operating activities.

True

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 balance sheet balances when ______.

assets equal liabilities plus stockholders' equity

Creditors want to see that a company that owes them money has _____

assets that are greater than its liabilities