Review Financial

Where is the time period covered by the income statement found?

In the heading

Revenues cause retained earnings to

increase

Revenues are:

sales of goods or services to customers

Expenses are:

the costs of doing business that are necessary to produce revenue

In accounting, the term net is used to describe

the difference between two amounts.

Stockholders' equity is

the owners' claims to resources of the corporation.

A list of all accounts and their balances at a particular date showing that debits equal credits is referred to as a(n) ____ ____ .

trial balance

For a corporation, the owners' claims to the resources of a company are called

stockholders' equity.

The purpose of an income statement is to:

summarize the profit-generating activities that occurred during a particular reporting period

Resources owned by a company are called

Assets

Using the accounting equation, stockholders' claims on the resources of the corporation can be expressed as

Assets - Liabilities.

Which of the following is the accounting equation?

Assets = Liabilities + Stockholders' equity

Which type of account is increased with a debit?

Expense

Which type of account is increased with a credit?

Revenue

A(n) ______ is a cost of doing business that is necessary to produce ___.

expense; revenue

The system that maintains records of a company's operations and then communicates that information to decision makers is referred to as ____ .

Accounting

The basic ____ ____ is referred to as the fundamental model of business valuation.

Accounting Equation

The fundamental model of business valuation is commonly referred to as the:

Accounting equation

When a company performs services for a customer, and the customer agrees to pay for the services at a later date, the transaction is recorded in which account?

Accounts receivable

A(n) ____ is a resource, such as cash, land, or buildings, that is owned by a company.

Asset

The financial statement that displays a firm's financial position on a particular date is the ____ .

Balance sheet

Which of the following financial statements shows a firm's financial position on a particular date?

Balance sheet

Which of the following are financial statements?

Balance sheet Income statement Statement of stockholders' equity

Jackson Corp. has beginning retained earnings of $400. During the year Jackson had $800 of revenues and $200 in expenses. Jackson paid a dividend of $100. What is retained earnings at year-end? $1,300 $300 $1,100 $900

Beginning balance $400 + $800 revenues - $200 expenses - $100 dividend = $900 retained earnings at year-end.

Geo Corporation issues stock to investors for $100,000. Recording this transaction will include which of the following?

Credit common stock Debit to cash

True or false: A balance sheet is a list of all accounts and their balances showing that debits equals credits.

False. A trial balance is a list of all accounts and their balances showing debits equals credits. A balance sheet presents assets, liabilities, and stockholders' equity.

The statement used to predict future profitability and a company's future cash-generating ability is the

Income Statement

The four financial statements published to provide information to external users include which of the following?

Income Statement Balance Sheet Statement of Stockholders' Equity Statement of Cash Flows

Information that best explains companies' stock price performance is reported on the ____ ____ .

Income statement

Any amount owed to a creditor is classified in the balance sheet as a/an ____

Liability

Undistributed profits that have accumulated in the company over time are called ____ earnings.

Retained

The accumulated net income earned since the inception of the corporation and not yet paid to shareholders is referred to as ____ ____ .

Retained Earnings

Which of the following are stockholder equity accounts?

Retained earnings Common stock

____ is the amount recorded as a result of the sale of products or services to customers.

Revenue

Which of the following item(s) is (are) assets?

Supplies Inventory

A(n) ______ is maintained for each financial statement item, whereas a(n) ______ contains all of the accounts of the company.

account; general ledger

The purpose of a statement of cash flows is to provide information about the

cash receipts and cash disbursements during a period.

In our society, the two main functions of accounting are to

communicate information to investors and creditors. measure business activities.

Roland Corporation borrows $10,000 from the bank by signing a promissory note. Recording this transaction will include:

credit to notes payable debit to cash

True or false: A ledger provides a chronological record of all transactions affecting the firm.

false

True or false: The two functions of financial accounting are to measure business activities and prepare tax returns.

false

Information that best explains companies' stock price performance is reported on the ____ .

income statement

The financial statement that is most useful in explaining a company's stock price performance is the

income statement.

A transaction is initially recorded in the journal, and then subsequently posted to the general ____ .

ledger

The term debit means to place the entry on the ____ hand side of the account, and the term credit means to place the entry on the ____ hand side of the account.

left right

Amounts owed to creditors are

liabilities

The statement of cash flows classifies items as

operating, investing, and financing.

The process of transferring information from a journal entry to the specific accounts affected in the general ledger is referred to as ____ .

posting

The process of transferring information from the journal to the ledger is referred to as

posting

Consistent with the ____ recognition principle, companies record revenue at the time goods are provided to customers

revenue

An simplified version that is used informally for analysis instead of drawing a formal general ledger account is referred to as a:

t-account

The type of information included in an account includes

the account title. columns for debits and credits.

The financial statement that provides information about cash receipts and cash disbursements for the period is the

statement of cash flows.

Accounts receivable are assets which represent

the amounts owed by customers.

Net income ______ retained earnings.

increases

Which of the following appear(s) on the balance sheet?

Accounts receivable Common stock Utilities payable

Rawlings Corp. borrows $3,000 on a note payable from Third National Bank. Which of the following is used to record this transaction?

Debit cash $3,000; credit note payable $3,000.

Carnival Company issues common stock to investors for $50,000. Which of the following is used to record this transaction?

Debit cash; credit common stock.

What is the effect of dividends on retained earnings?

Decrease

Identify the three components of retained earnings.

Dividends Expenses Revenues

____ Statements represent a company's primary means of communicating information to external users.

Financial

Which of the following contains a list of transactions affecting each account and the account's balance?

General ledger

Which of the following represents a common advantage of a computerized accounting system?

Journal entries are instantly posted to the ledger

Which of the following includes the list of transactions affecting each individual account and the account's balance?

Ledger

A company reports a net loss if its revenues are ____ than its expenses.

Less

A balance sheet lists the assets, ____ , and stockholders' equity as of a specific date.

Liabilities

The accounting equation is: Assets = ______ + Stockholders' Equity.

Liabilities

Which of the following items are found on a balance sheet?

Liabilities Assets Stockholders' equity

An income statement includes which of the following items?

Net income Revenues Expenses

Which of the following line items appear on an income statement?

Service revenue Salaries expense Supplies expense

The accounting equation is: Assets = Liabilities +

Stockholders' Equity

The two main functions of ____ are to (1) measure business activities and (2) to communicate those measurements to investors and creditors.

accounting

The types of accounts which affect retained earnings are

expenses. dividends. revenues.

Accounts receivable are

assets.

Accounts on the left side of the accounting equation (assets) are increased with a(n) ____ to the account, whereas accounts on the right side of the accounting equation are increased with a(n) ____ .

debit credit

An account should have an account title, account number, a place for the date of the transaction, and two columns for

debits and credits.

Dividends paid to stockholders will cause retained earnings to

decrease

A(n) ____ is a distribution of net income to the stockholders of a corporation.

dividend

____ is the common abbreviation for the Board that currently establishes financial accounting and reporting standards in the U.S.

fasb

Companies communicate information about their business activities primarily through

financial statements.

The three classifications on the statement of cash flows are cash flows from

financing activities. operating activities. investing activities.

The income statement is considered most useful for predicting

future profitability.

____ activities involve the buying and selling of land, buildings, and equipment used in the business. (Enter one word per blank)

investiment

In addition to the financial statements, which of the following must be included in the annual reports?

management discussion and analysis. notes disclosures.

The purpose of a general ledger is to

provide in a single location the list of transactions affecting each account and the account's balance.

Ursula Company's bookkeeper records revenue relating to a customer transaction. This indicates that the company

provided goods or services to a customer.

Indigo Company's journal reveals that equipment was debited and notes payable was credited, both for $10,000. Indigo Company must have

purchased equipment and signed a note for the purchase price

The purpose of a journal is to

record a chronological listing of every transaction for a company.

Which items are found on an income statement?

Expenses Revenues

Net income equals:

Revenues - Expenses

Credits increase revenues, whereas debits increase

expenses and dividends.

Keepers, Inc.'s balance sheet reported retained earnings as $10,000 at December 31, 2017 and $12,000 at the December 31, 2018. The income statement reported net income of $3,000 for the year ended December 31, 2018. Dividends declared for the year ended December 31, 2018 must equal $ ____.

2017 - 10,000 2018 - 12,000 *2,000 2018 Net income - 3,000 Dividends declared in the end of 2018 is $1,000

Which of the following appear on the statement of stockholders' equity?

Beginning balance of retained earnings Net income Dividends

Which of the following accounts is on the statement of stockholders' equity?

Common stock

True or false: The fundamental activities of a business are selling activities and marketing activities

False

When revenues are greater than expenses, a company has net ____ , whereas when revenues are less than expenses, a company has a net ____

Income Loss

____ activities involve purchasing goods from suppliers, designing and manufacturing products, and selling products to customers.

Operating

The heading of an income statement should include which of the following?

The accounting period covered by the statement The title of the financial statement The name of the business

Salaries already paid to employees for the month is a(n) ______ account that appears on the ______.

expense; income statement

An income statement reports:

expenses net income or loss revenues

The primary functions of accounting are to:

measure a company's activities. communicate information to decision makers.

Quartz Instruments had retained earnings of $145,000 at December 31, 2017. Net income for 2018 was $90,000, and dividends for 2018 were $30,000. What amount of retained earnings should be reported at December 31, 2018? $235,000 $175,000 $140,000 $205,000

$145,000 + $90,000 - $30,000 = $205,000 $205,000

Rahls issues stock to investors for $20,000, and has $5,000 of net income in its first year of operations. During Year 2, Rahls earns $10,000 in net income and pays a dividend to stockholders of $4,000. What is the balance in stockholders' equity at the end of year 2? $11,000 $19,000 $31,000 $39,000

$31,000 For total stockholders' equity, you must add the amount in the common stock account. $20,000 + $5,000 + $10,000 - $4,000 = $31,000.

Gem Corporation is a new company and obtains financing by issuing common stock to investors for $30,000. During the year, Gem earns $8,000 in net income and pays stockholders a dividend of $5,000. What is the total stockholders' equity at the end of the year? $43,000 $27,000 $38,000 $33,000

$33,000

Management discussion and analysis and note disclosures to the financial statements are included in the ____ ____.

Annual Report

Which of the following accounts are stockholders' equity accounts?

Common stock Retained earnings

Which of these would be found on a company's balance sheet?

Equipment Notes payable Accounts receivable

Fill in the blanks to complete the sentence. The financial statement that summarizes revenues and expenses for a period of time is the ____ ____ .

Income Statement

The purpose of a(n) ____ ____ is to report the profit-generating activities of the firm during a period of time. (Enter one word per blank)

Income Statement

What effect does revenue have on retained earnings?

Increases

What is the effect of net income on retained earnings?

Increases retained earnings

Which of the following are attributes of FASB?

Independence Full-time board members Private sector organization

In financial accounting which of the following are the three types of business activities of a company?

Operating activities Financing activities Investing activities

Which of the following are operating activities?

Paying advertising expenses Paying salaries to employees Providing services to customers

Which of the following is an investing activity?

Paying cash to buy equipment

Which of the following are external transactions?

Purchasing inventory from suppliers Borrowing money from the bank Paying salaries to employees

Which of the following is an external transaction?

Purchasing supplies from a vendor

A net loss ______ retained earnings.

decreases

A distribution of net income to owners is called a(n)

dividend.

Stockholders' equity arises primarily from amounts invested by shareholders and amounts ______.

earned by the corporation

When a company earns net income, its retained earnings:

increase

The difference between two amounts is described using the term ____ .

net

Revenues minus expenses equals

net income

Pizza Aroma generated $11,000 in revenues and had expenses of $6,000. Pizza Aroma's net income or loss is:

net income of $5,000

When expenses are greater than revenues, it is referred to as

net loss.

The two sources of stockholders' equity are amounts ______.

earned by the corporation paid in from shareholders

____ is a term that refers to a code or moral system that provides criteria for evaluating right or wrong.

ethics

A code or moral system that provides criteria for evaluating right and wrong is referred to as

ethics.