Chapter 1 LS

Select all that apply A financial statement heading states that it was prepared: "For the Year Ended December 31, 2020." What types of financial statements could this be?

income statement statement of cash flows statement of retained earnings

Which financial statement reports the operating, investing and financing activities affect on cash?

statement of cash flows

Creditors want to see that a company that owes them money has

assets that are greater than its liabilities

A net loss will

decrease retained earnings

The order in which assets are reported on the balance sheet is based on when the asset is ______.

expected to be used or turned into cash

True or false: Financial statements must have a year end of December 31. Revenue always equals cash collections during the accounting period. Net income equals the net amount of cash collected during the accounting period.

false

The underlying rules of accounting in the US are called principles. (Enter one word per blank.)

generally accepted accounting

Sole proprietorship, , and are the three primary forms of business organization. (Enter one word per blank.)

partnership and corporation

The statement of retained earnings reports the ______.

profits that have accumulated in the company over time

Accounts is an asset on the balance sheet that reports the amounts owed by customers for sales or services provided on credit. (Enter one word per blank.)

receivable

Match the financial statement that reports each of the following.

supplies - balance sheet supplies expense - income statement cash paid - statement of cash flows

Accounts are

used to accumulate and report the effects of each different business activity

At December 31, Equate, Inc.'s assets equal $50,000 and liabilities equal $30,000. Stockholders' equity must equal $

20,000

When a company is owed for sales made to customers on credit, the asset called:

Accounts Receivable will be reported on the balance sheet.

The purpose of the balance sheet is to report the amount of ______.

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

Click and drag on elements in order Place the single-step income statement items in the proper order from top to bottom.

revenues expenses net income

Companies typically prepare______ financial statements each accounting period.

4

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 balance sheet shows

assets, liabilities, stockholders equity

Ace Electronics bought equipment for $4,000. Normally the equipment would have cost $4,500, but the supplier gave Ace a special discount. Ace's balance sheet should report equipment of ______.

$4,000

A company started the month with $1,000 of Retained Earnings. During the month, it had Revenue of $5,000 and Expenses of $4,500. It also distributed a Dividend of $100 among its stockholders. The company's Retained Earnings at the end of the period equals $

1,400

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

The balance sheet reports

Assets and equities at a point in time

The balance sheet balances when ______.

Assets equal liabilities plus stockholders' equity.

Click and drag on elements in order Place the following in order (top down) of how they would appear in the heading of Deli Llama's annual income statement for the fiscal year ended March 31, 2020.

Deli Llama, Inc. Income Statement For the year of

Select all that apply Which of the following are true about the income statement? (Select all that apply.)

Each major caption has an underlined subtotal, such as Total Expenses. Revenues are listed before expenses. A dollar sign appears only at the top and bottom of the column of numbers. Net Income has a double underline.

Which group is responsible for creating the US GAAP?

Financial Accounting Standards Board (FASB)

Select all that apply Which of the following accounts are liabilities? (Check all that apply.)

Note Payable Accounts Payable Taxes Payable Wages Payable

Which financial statement reports the accumulation of profits kept by the business during the current accounting period with that of prior periods?

Statement of retained earnings

Select all that apply Which of the following are found on a balance sheet?

Supplies Notes Payable Equipment Common Stock

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

a single monetary unit, such as the US dollar

Individual expenses are accumulated in separate . (Enter only one word per blank.)

accounts

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

accounts

Expenses appear on the ______.

income statement

Select all that apply The statement of retained earnings reports the amount:

of earnings distributed to the company's owners during the accounting period of earnings kept by the company

The unit-of-measure assumption states that:

results of business activities should be reported in an appropriate monetary unit

Profits that have accumulated in the company over time are earnings. (Enter one word per blank.)

retained

Select all that apply Which of the following are reported on a balance sheet?

retained earnings stockholders' equity liabilities cash assets

Click and drag on elements in order Prepare a statement of retained earnings for the month of September from top to bottom.

retained earnings, september 1 net income dividends retained earnings, september 30

Select all that apply The heading of an income statement should include ______. (Select all that apply.)

the accounting period covered by the statement the title "Income Statement" the name of the business

True or false: Creditors would like a company that owes them money to have a large positive cash flow from operating activities.

true

Axis Company just bought a piece of land for $25,000. What a deal! 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.

The following are the assets, liabilities and stockholders' equity balances in millions at December 31 in alphabetical order: Accounts Payable $500 Cash 700 Common Stock 600 Equipment 900 Retained Earnings ? Retained Earnings equals Total Assets equals Total Liabilities plus Common Stock equals

500 1600 1100

Match the account title with the proper definition.

Accounts Receivable - The right to collect for sales/services provided on account. Accounts Payable - Amount owed to suppliers for purchases made on account. Notes Payable - Amount of loan owed to the bank. Common Stock - Amount stockholders contributed to the company. Retained Earnings - Accumulated profits kept in the business.

Select all that apply A single-step income statement includes which of the following? (Select all that apply.)

Expenses Revenues Net Income

Select all that apply Which of the following characteristics are needed in order for financial information to be useful?

Faithful representation Relevance

Select all that apply Which of the following are found on a balance sheet? (Select all that apply.)

Notes Payable Retained Earnings Accounts Receivable Cash

Select all that apply The heading of a balance sheet should include which of the following? (Check all that apply.)

The name of the business At December 31, 2020 The title "Balance Sheet"

Match the account title with the proper definition.

assets - amount of company's resources liabilities - amount of creditors claims to the company resources stockholder - amount of owners claims to the company's resources

Click and drag on elements in order Place the balance sheet line items in the proper order from top to bottom.

cash supplies equipment accounts payable common stock retained earnings

Select all that apply The statement of cash flows shows ______. (Select all that apply.)

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

Select all that apply Financial information is enhanced when it is ______. (Check all that apply.)

comparable verifiable timely understandable

Match the purpose with the appropriate financial statement.

income statement - Reports the financial performance of the business during the current accounting period. statement of retained earnings - Reports the accumulation of profits kept by the business during the current accounting period with that of prior periods. balance sheet - Reports the financial position of the business at a point in time. statement of cash flows - Reports the operating, investing and financing activities effect on cash.

Select all that apply The heading of an income statement ______. (Select all that apply.)

indicates if the reported numbers are rounded to the nearest thousand or million includes the name of the company includes the time period covered

Select all that apply Financial statements can be prepared ______. (Check all that apply.)

on a quarterly basis fiscal year basis monthly basis

The three types of activities reported on the statement of cash flows are the activities, activities, and activities. (Enter one word per blank.)

operating, investing, financing

A - income statement reports a single measure of income. It reports the difference between total revenues and total expenses. (Enter one word for each blank.)

single step