CONNECT Ch. 1
Purchase Equipment = $2,000 Pay rent = 500 Repay loan to bank = 5,000 Pay worker's salaries = 1,000 Total amount paid for operating activities?
$1,500; pay rent and pay worker's salaries
Sooner Company has had a net income of $8,000, $5,000, $12,000, and $10,000 over the first four years of the company's existence. If the average annual amount of dividends paid over the last four years is $3,000, what is the ending retained earnings balance?
$23,000
Assets $1,200,000 Liabilities 800,000 Net income 100,000 Retained earnings 250,000 Owners' claims to the company's resources amount to:
$400,000
How many of the following transactions are operating activities? Borrowed $50,000 from the bank Purchased $12,000 in supplies Provide services to customers for $27,000 Paid the utility bill of $750 Purchased a delivery truck for $12,000 Received $25,000 from issuing common stock
3
Emmitt had the following final balances after the first year of operations: assets, $55,000; stockholders' equity, $25,000; dividends, $3,000; and net income, $10,000. What is the amount of Emmitt's liabilities?
A=L+SE, L=A-SE: L= 55-25=$30,000
Which of the following best describes revenue?
Amounts earned from providing goods and services to a customer.
The accounting equation is defined as:
Assets = Liabilities + Stockholders' Equity.
The accounts that represent the resources of the company are called:
Assets.
Which of the following financial statements reports a company's retained earnings? Income statement. Balance sheet. Statement of cash flows. All of these.
Balance Sheet
The financial statement that represents the accounting equation is the:
Balance sheet
Liabilities are shown in which of the following statements?
Balance sheet.
The financial statement that represents activity over the entire life of the company is the:
Balance sheet.
Which of the following is a balance sheet item? Net Income. Dividends. Utilities Expense. Cash.
Cash
The two categories of stockholders' equity usually found in the balance sheet of a corporation are:
Common stock and retained earnings.
The form of business organization that is legally separate from its owners is a:
Corporation.
Which business form has the advantage of limited liability?
Corporation.
Liabilities are best defined as:
Debts or obligations the company owes resulting from past transactions.
The account type that represents payments to stockholders is called:
Dividends.
One disadvantage of the corporate form of business is:
Double taxation.
The costs associated with producing revenues are referred to as:
Expenses
Which of the following is not a balance sheet item? Assets. Retained Earnings. Expenses. Liabilities.
Expenses
The costs of providing goods and services to customers are referred to as:
Expenses.
GAAP is an abbreviation for:
Generally accepted accounting principles.
Order of financial statements?
I/S, S/E, B/S
The financial statement(s) that record activity over an interval of time is (are) the:
Income statement and statement of cash flows.
Net income (loss) appears in which two financial statements?
Income statement and statement of stockholders' equity.
Which of the following is the correct order for preparing the financial statements?
Income statement, statement of stockholders' equity, and balance sheet.
McGill purchases additional office equipment to better serve its customers. This purchase is classified as what type of activity?
Investing activity.
The accounts that represent resources owed to creditors are called:
Liabilities
Creditors' claims to a corporation's resources are referred to as:
Liabilities.
Which accounting amount best represents value created for stockholders during the current period?
Net income.
Which accounting number has the single greatest impact on stock prices?
Net income.
Which of the following items is reported in the statement of stockholders' equity?
Net income.
Which of the following accounts appears in the statement of stockholders' equity?
Retained Earnings.
Which of the following is not a balance sheet item? Assets. Common stock. Retained earnings. Revenues.
Revenues
Net income can best be described as:
Revenues minus expenses.
Which of the following items would not appear in an income statement? Delivery Expense. Accounts Payable. Service Revenue. Utilities Expense.
Service Revenue
Generally accepted accounting principles.
Standards or methods for presenting financial accounting information.
The owners' interest in a corporation is called:
Stockholder's equity.
Limited liability means:
Stockholders of a corporation are not obligated to pay the corporation's debts out of their own pocket.
Which of the following best explains the meaning of total stockholders' equity?
The amount of capital invested by stockholders plus profits retained over the life of the company.
Liabilities can be best described as:
The amount owed to creditors.
