Accounting Notes for Chapter 1

__________ represent the amount of resources being used during the period and found on the __________.

Expenses; income statement

Which of the following increase the common stock balance?

Financing provided by owners, investments by owners

On the balance sheet, account receivable represents _________.

amounts not yet collected from customers

A company owns an economic resource that will provide it with future benefits. This economic resource is _________.

an asset

Creditors want to see that a company that owes them money has ______.

assets that are greater than its liabilities

Which information is obtained from a statement of cash flows that is not found on the income statement?

cash from operating activities, cash flows from investing activities, cash flows from financing activities

A net loss ________ retained earnings.

decreases

Revenues are ________.

earned by selling goods or services to customers.

A net loss is reported when _______.

expenses are greater than revenues

Profit earned by a company that have not been paid to stockholders at the end of an accounting period are called ________ earnings.

retained

Net income is equal to _______.

revenues minus expenses

Which of the following classifications is not used to categorize cash inflows and cash outflows on the statement of cash flows?

spending (but does include: investing, financing and operating)

The purpose of a balance sheet is to report the ___________ accounts.

stockholders' equity, liability, assets

$100 (in thousands) is _______.

$100,000

Ace Electronics bought equipment for $4,000. Normally the equipment would have cost $4,500, but the supplier gave Ace a special discount. Ace's balance sheet should report equipment of ________.

$4,000

Companies typically prepare ___ financial statements each accounting period.

4

Which of the following is the correct basic accounting equation?

Assets = Liabillities + Stockholders' Equity

Identify the 4 significant items in headings of balance sheets

Name of the entity, title of the statement, specific date, unit of measure

An income statement includes which of the following items.

Net income, revenues, expenses

Which of these line items appear on a balance sheet?

Stockholder's equity, assets, liabilities

The line item "net income" appears on the _______.

income statement, statement of stockholders' equity

Accounts payable is a(n) _______.

liability on the balance sheet with a normal credit balance

Mauricio, the owner of Pizza Aroma, spent $2,500 of his own money to take his family to Disney World. Pizza Aroma's financial statements will report _____.

nothing about this trip

The statement of stockholder's equity is _______.

one of the four financial statements usually prepared by profit-making organizations

An asset is an amount ____, while a liability is an amount ____.

owned; owed

Financing activities involve exchanges between a company and its creditors and stockholders, while investing activities involve _________.

purchases of productive assets