Accounting Intro

Describe the order in which a company prepares financial statements.

1. Income statement 2. Statement of cash flow 3. Balance sheet 4. Statement if retained earnings

Full Disclosure Principle

Accounting principle that dictates that companies disclose circumstances and events that make a difference to financial statement users.

Why does a business need accounting information?

Accounting records business transactions and communicates financial information.

Accounting certifications include:

CPA

Classify the following business activities using the drop-down list. Happenings that affect the accounting equation.

Events

True or false: Dividends are resources paid to the stockholders.

True

Given that 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.

$13,700.00

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

$5,750.00

shareholder

*A person who invests in a corporation by buying stock and is a partial owner *Two owners

Given the descriptions below, which is (are) true regarding notes receivable? (Check all that apply.)

*Another name for a note receivable is a promissory note. *Notes receivable is classified as an asset. *It is the promise of another entity to pay a specific sum of money on a specified future date.

If equity is $30,000 and liabilities are $19,000, then assets must equal:

25,000$

Lenders

Banks, individuals, companies, car companies. Anyone who allows individuals to borrow money.

Identify the correct assumption for each of the following activities using the drop-down list. A business is accounted for separately from other business entities and its owner.

Business entity assumption

Identify which items belong on the statement of cash flows.

Cash flows from investing, operating and financing activities

A process of analyzing data to identify meaningful relations and trends is called data _______

Data analytics

A graphical presentation of data to help in understanding their significance is called data ___________

Data visualization

Identify the correct principle for each of the following activities using the drop-down list: A company records the expenses incurred to generate the revenue reported.

Expense recognition principle

Select the correct term for the following types of users: Customers

External Information User

Classify the following business activities using the drop-down list. Exchanges of value between two entities

External transactions

A(n) _____ user of accounting information does not directly run the organization.

External user

The organization that is responsible for issuing International Financial Reporting Standards is the:

FASB

True or false: Return on assets is computed as Net Income divided by Total Assets. True false question.

False

Select the correct term for the following types of users: Board of Directors

Internal information user

LLC (Limited Liability Company)

Limited liability, pass through income taxation, flexibility

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

Retained earnings and Dividends

common stock

Term used to describe the total amount paid in by stockholders for the shares they purchase.

FASB (Financial Accounting Standards Board)

The primary accounting standard-setting body in the United States.

Identify the correct assumption for each of the following activities using the drop-down list. The life of the company can be divided into specific time periods.

Time period assumption

Objectives of FASB Conceptual Framework

To provide information useful to investors, creditors, and others

Qualitive Characteristics of FASB

To require information that has relevance and faithful representation

Measurement onmeasurement of FASB

To set criteria for an item to be recognized as an element; and how to measure it.

Equity

a condition in which people receive from a relationship in proportion to what they give to it

Return on assets measures a company's ability to generate an adequate return on its investment in:

assets

Revenue Recognition

formal recording and reporting of revenues at the appropriate time

The return on assets for your small business was 11.2% last year and 12.6% this year. Your return on assets:

improved

The _____ is the first financial statement to be prepared.

income statement

The four basic financial statements are:

income statement, statement of retained earnings, balance sheet, statement of cash flows

Assets

money and other valuables belonging to an individual or business

Fraud Factors

opportunity, financial pressure, rationalization

payable

that which must be paid or can be paid

Elements of FASB

to define items in financial statements

Given the accounts below, choose all of the ones that affect equity. (Check all answers that apply.)

Common Stock Revenues Expenses Dividends

Identify the type of activity by choosing the best answer for each question. Select each item listed below as being an identifying, recording, or a communicating activity. Interpreting information from financial reports.

Communicating

Identify the type of activity by choosing the best answer for each question. Select each item listed below as being an identifying, recording, or a communicating activity. Preparing financial statements for creditors.

Communicating

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

Pressure

Identify the type of activity by choosing the best answer for each question. Select each item listed below as being an identifying, recording, or a communicating activity. Preparing and entering a list of checks issued.

Recording

Identify the type of activity by choosing the best answer for each question. Select each item listed below as being an identifying, recording, or a communicating activity. Using a cash register to enter sales.

Recording

Statement of Retained Earnings

Reports the way that net income and the distribution of dividends affected the financial position of the company during the accounting period.

Which of the statement(s) below define(s) an asset? (Check all that apply.)

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

Identify the correct principle for each of the following activities using the drop-down list: Revenue is recognized when goods are provided to the customer at the amount expected to be received.

Revenue recognition principle

Identify which items belong on the income statement.

Revenue, expenses, and net income.

The majority of accounting opportunities are in _____ accounting.

private

Liabilities

Amounts owed to creditors

Which of the following statements is the best definition of an asset?

Assets are resources owned or controlled by a company and that have expected future benefits.

Identify the correct assumption for each of the following activities using the drop-down list. Presumes that the business will continue operating in the future.

Going-concern assumption

Which of the following is a proper reflection of the sequence of steps when deciding on the preferred course of action in making an ethical decision?

Identify ethical concerns; Analyze options; Make ethical decision.

Identify the type of activity by choosing the best answer for each question. Select each item listed below as being an identifying, recording, or a communicating activity. Entering a list of the sales invoices, including the prices and quantities, for the company's recordkeeper.

Identifying

_____ includes opportunities in general accounting, cost accounting and internal auditing.

Managerial accounting

Accounting Principles

Principles that provide the framework upon which accounting standards are constructed.

Which of the following statements explain(s) how the accounting equation applies to businesses? (Check all that apply.)

The relation of assets, liabilities and equity is reflected in the equation. 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 states that Assets = Liabilities + Equity. The equation applies to all transactions and events.

In the fraud triangle, when a person feels an incentive to commit fraud, this is referred to as _______.

Precure

Match the term and the definition. The recording of transactions and events only, either manually, or electronically.

Recordkeeping

On January 31, Jean Consulting Company receives a bill for that month's utilities in the amount of $500. Jean sets it aside because she does not plan to pay the bill until its due date of February 15. What effect, if any, does this event have on the company's accounting equation as of January 31?

The business must record this event, which would increase liabilities and decrease equity on January 31.

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

*Common Stock *Equipment *Accounts Payable

Given the list of accounts below, identify which of them would appear on a balance sheet. (Check all that apply.)

*Equipment *Retained earnings, 12/31 *Supplies *Cash *Accounts Payable

All of the following are part of the FASB conceptual framework: (Select all that apply).

*Objectives- to provide info useful to investor, creditors and others *Qualitative characteristics- to requires info that has relevance and faithful rep. *Elements- to define items in financial statements. *Elements- to define in financial statements. *measurement onmeasurment -to set criteria for an item to be recognized as an element, and how to measure it.

Accounting Assumptions

*going concern *monetary unit *time period *business entity

The general ledger can be used to determine which of the following (select all answers which apply)

*which accounts are being used by a company and their balances at any given time. *common and unique accounts used by a business. *increases and decreases in all accounts in a business.

Boaz Company had beginning of year assets of $100 million and end of year assets of $120 million. Boaz's net income is $5 million. Calculate Boaz Company's return on assets. Round your answer to 1 decimal place.

4.5% ($5 million/[($100 million + $120 million/)2] = 4.5%)

Income Statement

A financial statement showing the revenue and expenses for a fiscal period.

Balance Sheet

A financial statement that reports assets, liabilities, and owner's equity on a specific date.

Which of the following would be considered a source document in an accounting system?

A source document identifies and describes transactions and is the basis for entering an event into the accounting system.

Match the term and the definition. An information and measurement system that identifies, records, and communicated relevant reliable, and comparable information about an organization's business activities.

Accounting

Identify what accounting is by selecting the correct statement.

Accounting is a system that identifies, records and communicates financial information.

Why is accounting important?

Accounting is important because we live in an information age where accounting information impacts all of us.

International Financial Reporting Standards (IFRS)

Accounting standards, issued by the IASB, that have been adopted by many countries outside of the United States.

Accounts Payable

Amounts to be paid in the future for goods or services already acquired

Accounts Receivable

Amounts to be received in the future due to the sale of goods or services

Identify the correct definition of an asset:

An asset is a resource that a business owns or controls

Identify which items belong on the balance sheet.

Cash, accounts receivable, and common stock

Identify the correct principle for each of the following activities using the drop-down list: A company reports the details behind financial statements that would impact user's decisions.

Full-disclosure principle

Analyze the following transaction and select the best answer .Tyler invests $2,000 cash in exchange for common stock, to begin a new company, Tyler's Tailoring. This transaction will:

Increase equity by $2,000

Classify the following business activities using the drop-down list. Exchanges within an entity.

Internal transactions

Data Analytics

Is geographical presentation of data to help people understand their significance

Which statement below defines accounting?

It identifies, records, and communicates business transactions.

Identify the type of activity by choosing the best answer for each question. Select each item listed below as being an identifying, recording, or a communicating activity.

Item #1:Preparing and entering a listing of checks issued is categorized as a Recording activity. Item #2:Using a cash register to enter sales is categorized as a Recording activity. Item #3:Entering a list of the sales invoices for the company's recordkeeper is an Identifying activity. Item #4:Interpreting information from financial reports is a Communicating activity. Item #5:Preparing financial statements is a Communicating activity

According to the fraud triangle, the three factors that must exist for a person to commit fraud include __, __, and __. (Check all that apply).

Look at what's saved

Expense Recognition Principle

Match expenses with revenues in the period when the company makes efforts to generate those revenues

Identify the correct principle for each of the following activities using the drop-down list: Accounting information is based on actual cost.

Measurement principle

Identify the correct assumption for each of the following activities using the drop-down list. Transactions and events are expressed in units of money.

Monetary unit assumption

What are Generally Accepted Accounting Principles?

The concepts and rules that govern financial accounting practice.

GAAP (Generally Accepted Accounting Principles)

The standards and rules that accountants follow while recording and reporting financial activities.

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.

Credit Sales

Transfer of products and services to a customer today while bearing the risk of collecting payment from that customer in the future. Also known as sales on account or services on account.

Data Visualization

describes technologies that allow users to see or visualize data to transform information into a business perspective

An external user of accounting information

does not directly run the organization