chapter 1: business decisions and financial accounting

dividends.....

decrease retained earnings

axis company just bought a piece of land for $25,000. the land next door was sold last month for $27,000. axis immediately put the land back on the market for $29,000, but so far hasn't had any offers. this land would appear on axis company's balance sheet at a value of _____.

$25,000

ace electronics sold $5,000 of goods to customers of which $3,000 has been collected. using accrual accounting, ace electronics should report revenues of.....

$5,000 revenues equal the amount earned, regardless of whether the cash has been collected

ace electronics had the following increases in the cash amount during the month: $20,000 from owners for stock; $5,000 from sales to customers; and $15,000 borrowed from river bank. ace's revenue for the month was _____

$5,000 sales are revenues. owner contributions, common stock are included in stockholders equity and loans are included in liabilites

a company's fiscal year end is a.....

12-month period ending on a day other than December 31

T or F: the order of the heading of income statement indicates the name of the statement first, the period of time covered, and the name of the company third.

False- the name of the company is first, followed by the statement name, and then the period of time covered by the income statement

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 unit of measure concept is the idea that a company should report its financial results on its financial statements using _____.

a single monitory unit, such as the US dollar

_____ are used to accumulate and report the effects of each different business activity separately rather than combining the various types of activities together.

accounts

distinguish between receivables and payables by selecting the correct statements:

accounts payable is a liability and reports the amount of cash to be paid in the future for purchases made on account. accounts receivable is an asset and reports the amount of cash to be received in the future for sales made on account.

a balance sheet shows.....

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

assets

balance sheet

which of the following are reported on a balance sheet?

cash retained earnings (in stockholders' equity section) assets liabilities stockholders' equity

the statement of cash flows shows.....

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

which line items appear on the statement of retained earnings?

dividends ending balance of retained earnings net income

the order in which liabilities are reported on the balance sheet is based on when the liability is _____.

expected to be paid or settled

a(n) _____ is a cost of doing business that is necessary to earn _____.

expense; revenue

notes to the financial statements.....

help users to understand how the financial statement amounts were derived include other info that may affect users' decisions

net income

income statement

which financial statement reports revenues and expenses?

income statement

financial statements.....

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

which of the following is found on both income statement and statement of retained earnings?

net income

which of these appears on both the income statement and the statement of retained earnings?

net income

if an external user of financial statements wants to know how amounts were derived, it would look at the _____.

notes to the financial statements

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

operating financing investing

profits that have accumulated in the company over time are _____ earnings

retained

which of these appears on both the statement of retained earnings and the balance sheet?

retained earnings

profit is equal to.....

revenue minus expenses

what are the income statement items in the proper order from top to bottom?

revenues expenses net income

which of the following cause retained earnings to increase?

revenues net income

investing activities

statement of cash flow

accounts receivable is _____.

the amount the company expects to collect for previous credit sales

net income increases when.....

the company incurs expenses that are less than the price of goods or services sold to its customers revenues are greater than expenses

the amount of cash reported on the balance sheet is _____ the ending cash balance reported on the statement of cash flows.

the same as