Accounting Chapter 1

Given that Jacob's Chocolates Company had beginning retained earnings of $4,000; net income during the period of $10,000; and dividends of $300 calculate the ending balance in the retained earnings account.

$13,700=$4,000 beginning retained earnings+ $10,000 net income - $300 dividends.

Jacob's Chocolates had beginning retained earnings of $4,000; net income of $10,000; and dividends of $300, calculate the ending balance in the retained earnings account.

$4,000 beginning balance + $10,000 net income - $300 dividends. = $13,700

Sheldon Company had beginning retained earnings of $1,000, net income of $5,000, and dividends of $250. The ending balance in the retained earnings account is

$5,750= $1,000 beginning balance + $5,000 net income - $250 dividends = $5,750.

Describe the order in which a company prepares financial statements.

1. income statement 2.statement of retained earnings 3. balance sheet 4.statement of cash flows

In every financial statement, there exists single and double underlines. Choose the statement below that describes what these are for and when to use them.

A single-ruled line denotes an addition or subtraction and double underlines indicate the final totals.

Identify the correct definition of an asset:

An asset is a resource that a business owns or controls

Identify the expanded accounting equation from the options below.

Assets = Liabilities + Common Stock - Dividends + Revenues - Expenses

Given the following list of accounts, identify which are classified as assets

Cash Land Supplies Equipment Accounts Receivable

Given the following lists of accounts, choose the one that contains only assets.

Cash, Building, Supplies, Accounts Receivable

Which list of accounts below, identifies only accounts that would appear on a balance sheet.

Common Stock, Equipment, Accounts Payable

Which of the following show a correct date line for a Balance Sheet: Multiple choice question.

December 31, 20xx

From the following statements, select the one that describes the effect of dividends on equity.

Dividends cause equity to decrease.

Given the list of accounts below, identify which of them would appear on a balance sheet.

Equipment Cash Accounts Payable Supplies Retained earnings, 12/31

Which of the following statements describes the effect of expenses on equity?

Expenses cause equity to decrease.

Which of the following statements represent(s) how expenses affect equity?

Higher expenses result in lower total equity. If expenses increase, then total equity decreases

Which statement below defines accounting?

It identifies, records, and communicates business transactions.

Given the statements below, choose the most accurate definition of dividends.

Outflows of cash or other assets paid to the owners of a corporation

An employee that is having trouble paying his personal bills might exhibit the following fraud factor:

Pressure

All of the following are part of the FASB conceptual framework

Recognition and measurement Objectives Qualitative characteristics Elements

Which of the statement(s) below define(s) an asset?

Resources with expected future benefits Resources controlled by the business An amount owned

A corporation's equity has two main parts. Identify these two parts.

Retained earnings Contributed capital

Identify which of the following lists of accounts would belong on the statement of retained earnings.

Retained earnings and Dividends

Which of the following statements is correct regarding revenues? Multiple choice question.

Revenues cause equity to increase.

Which of the following statements are true regarding the effect of revenues on the equity of a business?

Revenues cause equity to increase. Revenues that increase equity have many forms, such as consulting services and commissions from services.

The definition of revenues includes which of the following statements?

Revenues increase equity. Revenues are the sales of products or services to customers by a business

Given the following list of accounts, identify which are classified as assets.

Supplies Cash Equipment Accounts Receivable Land

Which of the following statements explain(s) how the accounting equation applies to businesses?

The equation states that Assets = Liabilities + Equity. The equation reflects that the total of what a business owns at any point in time will equal the total of what it owes creditors and owners. The equation applies to all transactions and events. The relation of assets, liabilities and equity is reflected in the equation.

The correct definition of a balance sheet includes which of the following statements?

The statement reports assets, liabilities and equity at a point in time. The statement reports the financial position of a company at a point in time. The statement reports the equality of the accounting equation at any point in time.

The heading of every financial statement contains several line items.

The title of the statement The company name. The date or time period the financial statement covers

Which of the following statements best represents the accounting equation?

The total of everything owned by a business must always equal the total of what the business owes to creditors and owners.

Which of the following statements best represents the reason for the accounting equation?

The total of everything owned by a business must always equal the total of what the business owes to creditors and owners.

True or false: Dividends are resources paid to the owners of a corporation.

True- Dividends are cash or other assets paid to the owners.

Identify which of the following statements is correct as to why accounting is important.

We live in an information age whereby accounting information impacts everyone.

The expanded accounting equation is defined as_____= Liabilities + Common Stock +_____- _____- Dividends. Do not include the word "account" or "accounts" in your answer.

assets= Liabilities + Common Stock + revenue - expenss - dividends

The FASB conceptual framework consists of all of the following except:

concepts

Dividends cause a(n)______ (increase/decrease) in equity and are recorded directly in _______(common stock/dividends/equity) .

decrease, dividends

The statement of retained earnings explains changes in equity from net income (or loss) and from any ______ over a period of time. (Select the accounts below which will correctly complete this question.)

dividends

Final totals in a financial statement are _____ underlined

double

Final totals in a financial statement are _____underlined

double

The principle which states that a company should record expenses it incurred in the same period as the revenue it generated is known as the

expense recognition principle

Users who do not directly run the organization and have limited access to accounting information are known as _____users.

external

The revenue recognition principle states that revenue is recognized when

goods or services are provided to customers

The _____ is the first financial statement to be prepared.

income statement

The definition of revenues is: Revenues _____ ________and are earned from the sale of products and services.

increase, equity

Another name for the expense recognition principle is:

matching principle

The _____ principle states that accounting information is based on actual cost.

measurement

The principle which states that accounting information is based on actual cost is called the

measurement

The four general accounting principles include:

measurement revenue recognition expense recognition full disclosure

The three factors that must exist for a person to commit fraud include __, __, and __.

pressure rationalization opportunity

Equity is composed of contributed capital and _____ ______

retained earnings

The principle which says that revenue is recognized when goods or services are provided to customers at an amount expected to be received from the customer is known as the

revenue recognition principle