Practice questions Accounting

What is the Statement of cash flow?

( a change statement) reconciles the Cash account ( beginning of period to end of period), showing cash inflows and cash outflows in three categories. What are these three categories? 1) Operating Activities 2) Investing Activities 3) Financing Activities

What is an example of a POSITION statement?

1) Balance sheet

What is one example of an internal stakeholder?

1) Business managers and employees - They want the business to succeed so that they can have money

What are the three types of External stakeholders?

1) Capital market stakeholder 2) Product/Service market stakeholder 3) Government stakeholder

Financial accounting gives information to EXTERNAL stakeholders about what?

1) Changes in financial condition during a period...what are the three financial statements? Income statement, statement of retained earnings, statement of cash flows 2) Changes in financial condition at a single point in time ( One financial statement): Balance sheet

Accounting is the language of business. The purpose of accounting is to provide information to both external and internal stakeholders so that they can...

1) Evaluate a company's current health 2) Evaluate a company's future prospects

What are two examples of FLOW statements?

1) Income Statement 2) Statement of Retained Earnings These are given monthly

What are two examples of Capital market stakeholders?

1) Lenders/Creditors 2) Owners/Stockholders

What are two examples of product/service Market stakeholders?

1) Suppliers 2) Costumers

Managerial Accounting gives forward-focused information to INTERNAL stakeholders so they can make decisions about the future. What are two of these ways?

1. Projected financial statements 2. Daily progress reports

Accounts summarize the effects of business transactions. What are 6 account categories?

A.L.E.R.E.D Assets, liability, equity, REVENUES, expenses, and dividends

Accounts receivable

Asset, Balance Sheet

Cash

Asset, Balance Sheet

Inventories

Asset, Balance Sheet

Property, Plant, and Equipment

Asset, Balance Sheet

What is the accounting equation?

Assets=Liability+ Equity ALE!! - This shows where a business stands

What is an example of an asset?

Cash, Land, Buildings...

What does the equal sign mean in the accounting equation?

Comes From!

Capital Stock

Equity, Balance Sheet

Cost of Sales

Expense, Income Statement

Income Tax expense

Expense, Income Statement

Interest Expense

Expense, Income Statement (Know EXPENSE indicates the Income Statement)

Selling and administrative expenses

Expenses, Income Statement

When does one make a balance sheet?

Last day of each accounting period (First day of the next accounting period)

Accounts Payable

Liability, Balance Sheet

Note Payable (Due in 10 years)

Liability, Balance Sheet

Income Tax Payable

Liability, Balance Sheet (When it says "Payable" know that means Balance Sheet)

What is the final result of integrated financial statements?

Net income from the income statement increases retained earnings on the Statement of Retained Earnings, which increases equity on the Balance Sheet

Dividends

Retained Earnings

Retained Earnings

Retained Earnings, this is the beginning of the Retained Earnings Statement and the equity on the balance sheet

Sales

Revenue, Income Statement

What is the difference between a stakeholder and a stockholder?

Stakeholder: Anyone that is interested or is affected by the corporation. Employees, the employees' families, suppliers, customers, community, and others Stockholder: A shareholder or an owner of stock in a corporation

Cash Payments for Operating Activities

Statement of Cash Flow

Cash Receipts for Operating Activities

Statement of Cash Flow

What is the purpose of the statement of Retained Earnings?

To see how much profit was kept!!