ACCTG 201 - Exam #1
The accounting equations is: Assets=______+Stockholders' Equity
Liabilities
A company borrows $25,000 from a bank and signs a note. What accounts will be affected by this transaction and what is the effect?
Notes payable increases, Cash increases
Which financial statement shows a firm's financial position on a particular date?
balance sheet
Ending retained earnings is calculated as
beginning retained earnings + net income - dividends
Reporting revenues only when cash is received and expenses only when cash is pad is called the ______ basis of accounting
cash
The two primary functions of financial accounting are to:
communicate measurements to external parties, measure business activities
A business organization that issues shares of stock to its investors is a ________
corporation
The three most common forms of business organization are sole proprietorship, ____________ and __________
corporation and partnership
Assets that will be used up or converted to cash within the next year are _______ assets
current
To increase an expense account, you should ____ the expense account
debit
The sum of accounts with _______ balances must equal the sum of the accounts with _______ balances
debit and credit
Cash receipts that have been recorded in the company's accounting records but are not yet recorded by the bank are
deposits outstanding
After the accountant analyzes the impact of a transaction on the accounting equation, the next step in the measurement process is to
determine the accounts to debit and credit
A distribution of net income to owners is called a
dividend
The two sources of stockholders' equity are amounts
earned by the corporation and paid in from shareholders
Purchasing inventory from suppliers, borrowing money from the bank, and paying salaries to employees are examples of _________ transactions
external
Selling stock to an investor is a ______ activity
financing
Which financial statement reports revenues and expenses?
income statement
When a company earns net income, its retained earnings
increase
Any amount owed to a creditor is classified in the balance sheet as a
liability
With respect to current assets, _________ refers to how quickly an asset can be converted to cash
liquidity
Long-term assets are expected to provide benefits for
more than one year
Which of the following appears on the statement of stockholders' equity?
net income, dividends, beginning balance of retained earnings
The statement of stockholders' equity is
one of the four required financial statements
The statement of cash flows includes:
operating, investing, and financing activities
The process of transferring information from a journal entry to the specific accounts affected in the general ledger is referred to as _______
posting
The purpose of a journal is to
record a chronological listing of every transaction for a company
The accumulated net income earned since the inception of the corporation and not yet paid to shareholders is referred to as _____ ______
retained earnings
______ is the amount recorded as a result of the sale of products or services to customers.
revenue
The two major categories reported in the income statement are
revenue and expenses
Net income equals
revenues - expenses
The income statement contains:
revenues and expenses
The types of accounts which affect retained earnings are
revenues, expenses, dividends
a petty cash fund is used for
small amounts of cash needed for low-cost items
For a corporation, the owners' claims to the resources of a company are called
stockholders' equity
The accounting equation is: Assets=Liabilities+_______
stockholders' quity
Which of the following items are found on a balance sheet
Assets, liabilities and stockholders' equity
True of false: A balance sheet is a list of all accounts and their balances showing that debits equal credits
False
What is the accounting equation?
Assets = Liabilities + Stockholders' Equity
What are the three components of retained earnings?
Revenues, expenses, dividends
The basic ______ ______ is referred to as the fundamental model of business valuation
accounting equation
Management discussion and analysis and note disclosures to the financial statements are included in the ______ ______
annual report
An ______ is a resource, such as cash, land, or buildings, that is owned by a company
asset
The balance sheet contains:
assets, liabilities, and stockholders' equity
The heading of a balance sheet for the 2018 fiscal period would include which of the following
the name of the business, December 31, 2018, the title "balance sheet"
A list of all accounts and their balances at a particular date showing that debits equal credits is referred to as a ______ _______
trial balance
