ACCT 2013 Chapter 1 Smart Book: A Framework for Financial Accounting
Rahls issues stock to investors for $20,000, and has $5,000 of net income in its first year of operations. During Year 2, Rahls earns $10,000 in net income and pays a dividend to stockholders of $4,000. What is the balance in stockholders' equity at the end of year 2?
$31,000
Which of the following appear on the statement of stockholders' equity
Beginning balance of retained earnings Dividends Net income
Gem Corporation is a new company and obtains financing by issuing common stock to investors for $30,000. During the year, Gem earns $8,000 in net income and pays stockholders a dividend of $5,000. What is the total stockholders' equity at the end of the year?
Reason: Beginning retained earnings + Common stock + Net income - Dividends = Ending retained earnings. 0 + $30,000 + $8,000 - $5,000 = $33,000.
Which of the following line items appear on an income statement?
Revenues Supplies expense
The four financial statements published to provide information to external users include which of the following
Statement of Stockholders' Equity Income Statement Statement of Cash Flows Balance Sheet
The heading of an income statement should include which of the following
The title of the financial statement The name of the business The accounting period covered by the statement
The system that maintains records of a company's operations and then communicates that information to decision makers is referred to as
accounting
The primary functions of accounting are to
communicate information to decision makers. measure a company's activities
The form of business organization where an entity is legally separate from its owners and issues shares of stock is a
corporation
________________ Statements represent a company's primary means of communicating information to external users
financial
The income statement is considered most useful for predicting
future profitability
Where is the time period covered by the income statement found
heading
Which financial statement reports revenues and expenses
income statement
if revenues are less than expenses, a company has
net loss
The two sources of stockholders' equity are amounts
paid in from shareholders earned by the corporation
The three most common forms of business organization are sole proprietorship
partnership and corporation
Undistributed profits that have accumulated in the company over time are called ________________ earnings
retained
An income statement reports
revenues and expenses and net income loss
the purpose of an income statement is to
summarize the profit-generating activities that occurred during a particular reporting period
