2-4 units Finacial accounting

prepaid expenses

the costs of assets acquired in one period that will be expensed in a future period

0 / 1 What is a classified balance sheet? A balance sheet that is for a period of time rather than as of a point in time A balance sheet that distinguishes between current and long-term assets A balance sheet that separates liabilities from equities A balance sheet that is not publicly disclosed

A balance sheet that distinguishes between current and long-term assets

What is a general journal? The record of the minutes of the meetings of the board of directors A schedule reconciling the sum of assets with the sum of liabilities and equities A chronological record of all transactions of a business A collection of accounts used in the normal course of business

A chronological record of all transactions of a business Correct! A general journal is a chronological record of all transactions of a business, recorded in debit-and-credit language.

How are dividends typically recorded with debits and credits? A credit, representing a reduction in assets A debit, representing a reduction in equity A debit, representing an increase in assets A credit, representing an increase in equity

A debit, representing a reduction in equity

What does a debit entry to a liability account represent? An increase An expense A decrease A revenue

A decrease Correct! A debit to a liability account represents a decrease in that account

What does a debit entry to an equity account represent? A decrease Correct! A debit to an equity account represents a decrease in that account. A cash revenue A revenue An increase

A decrease Correct! A debit to an equity account represents a decrease in that account.

Statement of Cash Flows

A financial statement that provides financial information about the cash receipts and cash payments of a business for a specific period of time.

Income Statement

A financial statement that reports a company's revenues and expenses and resulting net income or net loss for a specific period of time.

journal

A form for recording transactions in chronological order in debits and credit language

In what setting might a company use special journals as well as a general journal? Companies with very few purchase transactions Companies with very few cash transactions A small company with few transactions A large company with many transactions

A large company with many transactions Correct! Larger companies having many transactions each year may use special journals (for example, a cash receipts journal or a purchases journal) as well as a general journal.

What is a chart of accounts? The reporting sequence of the income statement A chronological listing of accounts The reporting sequence of the balance sheet A list of accounts used by a company to classify transactions

A list of accounts used by a company to classify transactions Correct!

In which type of business would accrual basis accounting result in the same income measure as cash basis accounting? A medium-sized construction business, in which most of the assets are long-term construction equipment items that can last for up to 15 years A small manufacturing business, in which routine inventory items are produced in bulk now, stored for two or three years, and then sold to customers A small business, in which all sales amounts are collected in cash at the time of the sale and all expenses are paid in cash immediately A large manufacturing business, in which orders are received now, cash advances are collected from customers now, and delivery of manufactured products occurs many years from now

A small business, in which all sales amounts are collected in cash at the time of the sale and all expenses are paid in cash immediately Correct! In a small cash-sales and cash-expenses business, accrual basis accounting gives the same measure of net income as cash basis accounting because the cash flows occur at the same time as does the economic activity.

What is a balance sheet? A)Report of the assets, liabilities, and equity of a company as of a point in time B) Report of the revenues and expenses of a company during a period C)Report of the total of the balances of all of a company's bank accounts D Report of the operating, investing, and financing cash flows of a company during a period

A)Report of the assets, liabilities, and equity of a company as of a point in time

Which item is a liability? Accounts receivable Retained earnings Capital stock Accounts payable

Account payable

Examples of liability accounts

Accounts Payable Notes Payable

Which statement is correct? Valuation basis accounting provides a more accurate picture of a company's profitability. Asset basis accounting provides a more accurate picture of a company's profitability. Accrual basis accounting provides a more accurate picture of a company's profitability. Cash basis accounting provides a more accurate picture of a company's profitability.

Accrual basis accounting provides a more accurate picture of a company's profitability. Correct! Accrual basis accounting provides a more accurate picture of a company's profitability. Accordingly, accrual basis accounting is required by generally accepted accounting principles (GAAP).

What are investing activities? Activities that are part of the day-to-day business of a company Activities associated with forecasting sales and overhead costs Activities whereby cash is obtained from or repaid to owners and creditors Activities associated with buying and selling long-term assets like land, buildings, and equipment

Activities associated with buying and selling long-term assets like land, buildings, and equipment

1 / 1 What is bad debt expense? Amount of inventory lost, stolen, or sold during the year Amount of gross profit divided by sales for the year Amount of uncollectible accounts created by credit sales during the year Amount of wear and tear on long-lived assets during the year

Amount of uncollectible accounts created by credit sales during the year

1 / 1 What does a debit entry to an asset account represent? A decrease A revenue An expense An increase

An increase Correct! A debit to an asset account represents an increase in that account.

Cash, accounts receivable, prepaid expense, inventory building land all of these relate to what category in the balance sheet

Asset

Which is the proper description of the accounting equation? Owners' Equity = Liabilities Assets = Liabilities + Owners' Equity Owners' Equity. Assets = Liabilities Owners' Equity = Assets

Assets = Liabilities + Owners' Equity

current assets

Assets that companies expect to convert to cash or use up within one year or the operating cycle, whichever is longer.

What is the normal order of a chart of accounts? Owners' equity, liabilities, assets, expenses, and sales Sales, expenses, owners' equity, assets, and liabilities Liabilities, expenses, assets, owners' equity, and sales Assets, liabilities, owners' equity, sales, and expenses

Assets, liabilities, owners' equity, sales, and expenses Correct!

adjusting entries

At the end of each accounting period, in order to report all asset, liability, and owners' equity amounts properly and to recognize all revenues and expenses for the period on an accrual basis, accountants are required to make any necessary adjustments prior to preparing the financial statements.

1 / 1 Which of these items is a source of cash for a financing activity? Borrowing money Paying rent Paying dividends Buying a building

Borrowing money

Bullzai Inc. has recently taken part in the following business transactions: Borrowed cash from a bank. Purchased a building. Sold an old, used machine. Collected cash from customers. Which of these items is a source of cash from an investing activity? Selling an old, used machine Borrowing cash from a bank Buying a building Collecting cash from customers

Buying a building

Which of these items is a use of cash in an investing activity? Collecting cash from customers Selling an old building Buying a machine Borrowing cash from a bank

Buying a machine

Examples of asset account

Cash Inventory Equipment

Here are some financial statement items for Sparkit Company. Cash flow from investing activities during the year Retained earnings at the beginning of the year Cash flow from operating activities during the year Net income for the year Cash flow from financing activities during the year Cash balance at the beginning of the year Which items are needed to compute Sparkit's ending cash balance for the year? Cash balance at the beginning of the year, net income during the year, cash flow from investing activities during the year, and retained earnings at the beginning of the year or Cash balance at the beginning of the year, cash flow from operating activities during the year, cash flow from investing activities during the year, and cash flow from financing activities during the year

Cash balance at the beginning of the year, cash flow from operating activities during the year, cash flow from investing activities during the year, and cash flow from financing activities during the year

Operating Activities

Cash flow activities that include the cash effects of transactions that create revenues and expenses and thus enter into the determination of net income.

ere are some financial statement items for the year for Endothon Company: Cash paid for dividends Cash paid to employees for wages Cash paid to purchase a new building Cash received from customers Cash received from the sale of land Cash paid for rent Cash received as new investment from owners Which items should be included in the computation of Endothon's operating cash flow for the year? Cash paid for dividends and cash received as new investment from owners Cash paid to purchase a new building and cash received from the sale of land Cash received from customers and cash paid for dividends Cash received from customers, cash paid for rent, and cash paid to employees for wages

Cash received from customers, cash paid for rent, and cash paid to employees for wages

Which of these items is a source of cash for an operating activity? Selling an old, used machine Buying a building Borrowing cash from a bank Collecting cash from customer

Collecting cash from customer

What is a statement of cash flows? Report of the assets, liabilities, and equity of a company as of a point in time. Report of the revenues and expenses of a company during a period. Report of the total of the balances of all of a company's bank accounts. Report of the operating, investing, and financing cash flows of a company during a period

Correct! A report of the operating, investing, and financing cash flows of a company during a period is a statement of cash flows

which item is closed to a zero balance at the end of each accounting period? Loans Payable Retained Earnings Cost of Goods Sold Cash

Cost of Goods Sold Correct! Cost of goods sold is an expense account. Expense accounts are nominal accounts, which are closed to a zero balance at the end of each accounting period.

Which item is an expense item? Cash Cost of Goods Sold Sales Accounts Payable

Cost of goods sold

operating expenses

Costs involved in operating a business, such as rent, utilities, and salaries.

On September 1 of Year 1, the company received $3,600 cash for rent in advance. This $3,600 rental receipt covers the period from September 1 of Year 1 to August 31 of Year 2. On September 1, the receipt of the cash was recorded as a liability. Which debit or credit is correctly included in the adjusting journal entry necessary on December 31 with respect to this rent received in advance? Debit to Rent Revenue for $2,400 Credit to Rent Revenue for $2,400 Credit to Rent Revenue for $1,200 Debit to Rent Revenue for $1,200

Credit to Rent Revenue for $1,200 Correct! Unearned Rent 1,200 Rent Revenue 1,200

On September 1 of Year 1, the company received $3,600 cash for rent in advance. This $3,600 rental receipt covers the period from September 1 of Year 1 to August 31 of Year 2. Assuming that this is not an adjusting journal entry, which debit or credit is correctly included in the journal entry necessary to record this cash received for rent in advance? Debit to Unearned Rent for $3,600 Debit to Rent Revenue for $3,600 Credit to Unearned Rent for $3,600 Credit to Rent Revenue for $3,600

Credit to Unearned Rent for $3,600 Cash 3,600 Unearned Rent 3,600

Strime Company collected cash of $1,300 on account for credit sales previously recorded. Which entry is included in the journal entry necessary to record this cash collection on account? Debit to accounts payable for $1,300 Credit to accounts payable for $1,300 Credit to accounts receivable for $1,300 Debits to accounts receivable for $1,300

Credit to accounts receivable for $1,300 Correct! Cash 1,300 Accounts Receivable 1,300

when closing the year Revenue effect Retained earning as Debit or credit?

Credit; an increase in retained earning

How are the items arranged in a journal entry? Credit first, debit second Debit first, credit second Debits and credits aligned in the same column Debit indented to the right

Debit first, credit second Correct! The debit entry is listed first; the credit entry is listed second and is indented to the right.

On February 1 of Year 1, Sparkit Company received $100,000 cash from a one-year bank loan. The interest rate on the loan is 8 percent. No payments are due on the loan until January 31 of Year 2. Which debit or credit is correctly included in the adjusting journal entry necessary on December 31 with respect to this loan? Debit to Interest Payable for $7,333 Credit to Interest Expense for $8,000 Credit to Interest Payable for $8,000 Debit to Interest Expense for $7,333

Debit to Interest Expense for $7,333 Interest Expense 7,333 Interest Payable 7,333

Here is the end-of-year account balance information from the accounting records of Kamelon Company. yada yada yada view answers to find answer Which debit or credit would appear in the closing entries for the year? Debit to Dividends for $700 Debit to Sales Revenue for $10,000 Debit to Accounts Payable for $1,100 Debit to Cost of Goods Sold for $9,000

Debit to Sales Revenue for $10,000 Correct!

Alliah Company paid $4,100 cash for insurance coverage, which will be in effect for the next year. Which entry is included in the journal entry necessary to record this prepayment of insurance? Debit to cash for $4,100 Debit to unearned insurance for $4,100 Debit to prepaid insurance for $4,100 Debit to retained earnings for $4,100

Debit to prepaid insurance for $4,100 Correct! Prepaid Insurance 4,100 Cash 4,100

Dellberg Company paid $850 cash for its electricity bill for last month. To this point, nothing had been recorded in the books with respect to this electricity bill. Which entry is included in the journal entry necessary to record this cash payment? Debit to utilities expense for $850 Debit to accounts payable for $850 Credit to utilities expense for $850 Credit to accounts payable for $850

Debit to utilities expense for $850 Correct! Utilities Expense 850 Cash 850

Equity: DEbits ___________ Credits __________

Debits Decrease Credits Increase

liability: Debits_____________ Credits__________

Debits Decrease Credits increase

Assets: Debits __________________ Credits ___________________

Debits increase credits decreases

when closing the year Expense and Div. transfers effect the retained earning as Debits or credits?

Debits; an decrease in retained earning

At the end of the year, before any closing entries are made, which account typically has a debit balance? Capital Stock Dividends Long-Term Debt Sales Revenue

Dividends Correct! The accounts that typically have debit balances are Assets, Expenses, and Dividends. Conversely, the accounts that typically have credit balances are Liabilities, Owners' Equity (Capital Stock and Retained Earnings), and Revenues.

After the effects of every transaction are considered and recorded, what must the accounting equation do? Equal total assets Equal itself, or balance Equal total owners' equity Equal total liabilities

Equal itself, or balance

How does the time period concept impact the process of financial reporting? Financial statements are provided at the time a corporation issues new shares. Financial statements are not provided until the owners are preparing to sell the business. Financial statements are provided on a regular basis, at least once a year. Financial statements are provided only under special circumstances, usually once every five years.

Financial statements are provided on a regular basis, at least once a year. Correct! In order to provide timely accounting information, the time period concept divides the life of an enterprise into distinct and relatively short (generally 12 months or less) accounting periods.

burrowing or repaying loans cash from shareholders paying dividend categorize as what on the cash flow statements

Financing activities

What are the major activities in the cash flow statement? Net income, distributions, and financing Distributions, operating, and investing Net income, investing, and financing Financing, operating, and investing

Financing, operating, and investing

What name is given to a 12-month accounting period? Calendar year Recognition year Fiscal year Accrual year

Fiscal year Correct! The 12-month accounting period is referred to as the fiscal year.

What is one step in the process of preparing a journal entry? For each account, determine the associated cash flow. For each account, determine the balance from the prior year. For each account, determine whether the account is consolidated or not. For each account, determine if it has increased or decreased.

For each account, determine if it has increased or decreased. Correct! Preparing a journal entry involves a three-step process: (1) identify which accounts are involved, (2) for each account, determine if it is increased or decreased, and (3) for each account, determine by how much it has changed.

Which statement best describes the main features of inventories? Goods due from customers who have purchased on account Goods used by a company on a long-term basis, usually more than five years Goods purchased and held for sale Goods used by company employees on a daily basis

Goods purchased and held for sale

What is a company's gross profit percentage? Net Income ÷ Owners' Equity Gross Profit ÷ Net Income Net Income ÷ Sales Gross Profit ÷ Sales

Gross Profit ÷ Sales Correct! Gross profit percentage is computed as Gross Profit divided by Sales.

Gross Profit Margin

Gross Profit/Sales which also mean: Net Sales - Cost of Goods Sold/ Net sales to get the Ratio

What is a single-step income statement? ncludes all other expenses, but omits income tax expense Groups and total revenues; groups and total expenses Omits both interest expense and income tax expense Emphasizes separate computation of gross profit and operating income

Groups and total revenues; groups and total expenses Correct! In a single-step income statement, all revenues are grouped together, all expenses are grouped together, and net income is computed as the difference between total revenues and total expenses.

Where and when should an expense already paid in cash be reported if it cannot be directly matched with an associated revenue? In the income statement as an expense in the accounting period in which it is incurred In the balance sheet as a liability in the accounting period in which it is incurred In the income statement as an asset in the accounting period in which it is incurred In the balance sheet as an asset in the accounting period in which it is incurred

In the income statement as an expense in the accounting period in which it is incurred Correct! Expenses that cannot be matched with revenues are assigned to the accounting period in which they are incurred.

Investing Activities

Includes cash transactions involving the purchase and sale of long-term assets and current investments

single-step income statement

Income statement format that groups all revenues together and then lists and deducts all expenses together without calculating any subtotals/ subgroup

sale or purchase of land building and equipment making loans Sale or purchasing of company stock as it related to the cash flow statements

Investing activities

accounts payable, taxes payable, note payable all of these relate to what category in the balance sheet?

Liabilities

What is unearned revenue?

Liability recorded when cash is received before providing a service.

How is earnings per share (EPS) computed? Net income divided by the number of shares Net income divided by total sales revenue Total expenses divided by sales revenue Total equity divided by sales revenue

Net income divided by the number of shares

What is a use of cash from a financing activity? Paying rent Borrowing money Buying a building Paying dividends

Paying dividends

Deprecation Expense

Portion of the original cost of a long-term tangible asset allocated to an expense account in a given period. wear and tear of the asset used in the operations

in the context of accounting, what is the meaning of the word "journalizing"? Copying transaction data from a journal to a ledger Recording a transaction in a journal entry Transmitting summarized data to the accountants preparing the financial statements Copying transaction data from a ledger to a journal

Recording a transaction in a journal entry Correct! "Journalizing" is recording a transaction, in debit-and-credit language, as a journal entry in a general journal

What is accrual accounting? Recording the amount of revenues and the amount of expenses when process cycles are complete Recording revenues and expenses when earned or incurred, not when cash is received or paid Recording the amount of revenues and the amount of expenses when budgets are approved and adopted Recording the amount of revenues and the amount of expenses when cash is received or paid

Recording revenues and expenses when earned or incurred, not when cash is received or paid Correct! Accrual accounting is the process of recording expenses and revenues when incurred and earned, regardless of when cash is paid or received.

What is cash basis accounting? Separation of accounting items into operating, investing, and financing activities Payment of all income taxes in cash in the period legally required Recording revenues when earned and expenses when incurred Recording revenues when cash is received and expenses when cash is paid

Recording revenues when cash is received and expenses when cash is paid Correct! When cash basis accounting is used, revenues are reported when cash is received and expenses are reported when cash is paid. In contrast, accrual basis accounting is the process of recording expenses and revenues when incurred and earned, regardless of when cash is paid or received.

journilizing

Recording transactions in a journal

1 / 1 Which of these items is a use of cash in a financing activity? Repaying loans Buying buildings Selling goods Paying wages

Repaying loans

What is an income statement? Report of the revenues and expenses of a company during a period Report of the operating, investing, and financing cash flows of a company during a period Report of the total of the balances of all of a company's bank accounts Report of the assets, liabilities, and equity of a company as of a point in time

Report of the revenues and expenses of a company during a period

Cash Basis Accounting

Reporting income when the cash is received and expenses when the cash is paid.

To which item on the balance sheet does net income articulate? Retained Earnings Capital Stock Cash Sales

Retained Earnings Correct! Ending Retained Earnings = Beginning Retained Earnings + Net Income - Dividends

Which item is an owners' equity item? Inventory Accounts payable Retained earnings .Accounts receivable

Retained earning

1 / 1 Which are components of an income statement? Retained earnings and dividends Current and noncurrent assets Short-term and accrued liabilities Revenue and expenses

Revenue and expenses

which accounts are nominal?

Revenue expense and dividends

Which item is a revenue item? Loan Payable Cash Sales Accounts Receivable

Sales

Which one of these items is a nominal account? Sales Revenue Capital Stock Retained Earnings Accounts Payable

Sales Revenue Correct! Nominal accounts are Revenues, Expenses, and Dividends. Real accounts are Asset, Liability, and Owners' Equity accounts.

1 / 1 What is "gross profit"? Total Revenues − Total Expenses Total Assets − Total Liabilities Accounts Receivable − Accounts Payable Sales − Cost of Goods Sold.

Sales − Cost of Goods Sold. Correct! The difference between Sales and Cost of Goods Sold represents the difference between a company's total retail selling prices to customers and those items' total wholesale purchase costs from suppliers.

Which financial statement provides a detailed explanation of the year-to-year change in the cash account balance? Statement of cash flows. Statement of retained earnings. Balance sheet. Income statement.

Statement of cash flows. Correct! The change in cash during the year is the explained by the sum of the cash flows from operating, investing, and financing activities as reported in the statement of cash flows. . Income statement.Incorrect. The income statement provides a detailed explanation of the year-to-year change in one component of retained earnings.

0 / 1 Which financial statement provides a detailed explanation of one component in the year-to-year change in the retained earnings balance? Balance sheet. Statement of cash flows. Trial balance. Income statement.

Statement of cash flows. Incorrect. The change in cash during the year is the explained by the sum of the cash flows from operating, investing, and financing activities as reported in the statement of cash flows. Correct! The income statement provides a detailed explanation of net income, which is one component of the year-to-year change in retained earnings.

1 / 1 What is net income? The amount of assets consumed through business operations The total amount of assets reported in the balance sheet The amount of cash on hand at the end of the year The amount by which revenues exceed expenses

The amount by which revenues exceed expenses

Bad Debt Expense

The amount of the adjustment to the allowance for uncollectible accounts, representing the cost of estimated future bad debts charged to the current period.

What is depreciation expense? The amount of inventory lost, stolen, or sold during the year The amount of gross profit divided by sales for the year The amount of uncollectible accounts created by credit sales during the year The amount of wear and tear on long-lived assets during the year

The amount of wear and tear on long-lived assets during the year

Expenses

The cost of assets consumed or services used in the process of generating revenues. Cost money to make money

0 / 1 What does owners' equity represent? The difference between current assets and long-term assets The difference between current liabilities and long-term liabilities The difference between total liabilities and total owners' equity The difference between total assets and total liabilities

The difference between total assets and total liabilities

0 / 1 For most companies, when assets or liabilities are classified as "current" on the balance sheet, it generally means the related assets or liabilities will be turned into cash or will be required to be paid, respectively, within what time frame? The next month The next year The next six months the balance sheet. The next quarter

The next year

what is articulation? The process of separating cash flows into three categories: operating, investing, and financing The relationship between the total of the assets on the balance sheet and the total of the liabilities and equities on the balance sheet The process of recording, analyzing, and summarizing a company's transactions in order to be able to prepare the financial statements The relationship among financial statements whereby an item on the income statement or statement of cash flows helps explain the period-to-period change in an item on the balance sheet

The relationship among financial statements whereby an item on the income statement or statement of cash flows helps explain the period-to-period change in an item on the balance sheet

According to the accounting rules, what are operating activities? Those activities whereby cash is obtained from or repaid to owners and creditors Those activities associated with buying and selling long-term assets—primarily the purchase and sale of land, buildings, and equipment Those activities that are part of the day-to-day business of a company Those activities associated with forecasting sales and determining the amount and timing of materials purchases, employee hiring, and overhead costs

Those activities that are part of the day-to-day business of a company

What are financing activities? Those activities associated with buying and selling long-term assets—primarily the purchase and sale of land, buildings, and equipment. Those activities associated with forecasting sales and determining the amount and timing of materials purchases, employee hiring, and overhead costs. Those activities that are part of the day-to-day business of a company. Those activities whereby cash is obtained from or repaid to owners and creditors.

Those activities whereby cash is obtained from or repaid to owners and creditors.

In making a journal entry, why is it important to know whether an account increased or decreased? To determine whether the transaction will be posted to the ledger To determine whether the transaction impacts the balance sheet To determine whether the account should be debited or credited To determine whether the transaction impacts the income statement

To determine whether the account should be debited or credited Correct! In making a journal entry, whether an account is debited or credited depends on whether the account increased or decreased as a result of the transaction.

1 / 1 A company issued capital stock to new investors in exchange for $100,000 cash. What is the effect of this transaction on the accounting equation? Total liabilities and owners' equity increase. Total assets and owners' equity increase. Total liabilities increase and owners' equity decreases. Total assets increase and owners' equity decreases.

Total assets and owners' equity increase. Correct! Total assets and owners' equity increase. The asset is cash.

what accounts are account for the majority of adjustment entries(4)?

Unrecorded receivables Unrecorded liabilities Prepaid expenses Unearned revenues

When does an accountant perform transaction analysis? When posting the accounts When preparing the income statement When recording items in the journal When preparing the balance sheet

When recording items in the journal Correct! All necessary transaction analysis is done when a transaction is recorded, in debit-and-credit form, in the journal.

unrecorded liabilities

expenses incurred but not yet recognized -we received some services, we owe someone, but we haven't recorded it yet -debit expense, credit liability

period-in-time statements

income statement, statement of stockholders equity, and statement of cash flows

How do you close a revenue account to the retained earnings?

revenue are credits; to 0 them out we debits them to retained earnings Sales Revenue 100 Retained Earnings 100

unrecorded receivables (adj)

revenue recognition principle of accrual accounting, revenues should be recorded when earned, regardless of when the cash is received. If revenue is earned but not yet collected in cash, a receivable exist

balance sheet

snapshot of what a company owns(asset) vs what it owes(liabailitys ) + who invested in Equity A=L+OE

what statement has operation investing finance activities in the category's

statement of cashflows

common stock and retained earnings category as what as it relates to the balance sheet?

stockholders equity

Cost of Goods Sold

the amount of money a firm spent to buy or produce the products it sold during the period to which the income statement applies

retained earnings

the amount of net income retained in the corporation

Posting

the process of transferring the debit and credit information from the journal to individual accounts in the general ledger

closing the year where does the nominal account transfer to?

they are 0 out and transferred to the retained earing

What statement has asset liabilities and equity

balance sheet

point-in-time statement

balance sheet

The Whole Pine Company's liabilities equal $124,000, and its stockholders' equity totals $68,500. What is the amount of its assets? $55,500 $68,500 $124,000 $192,500

$192,500

Strime Company's assets equal $104,000, and its stockholders' equity totals $68,500. What is the amount of its liabilities? $104,000 $172,500 $68,500 $35,500

$35,500

The Cash Flow Statement Equation

+/- Cash Flows from Operating Activities (CFO) +/- Cash Flows from Investing Activities (CFI) +/- Cash Flows from Financing Activities (CFF) __________________________________________________ Change in Cash + Beginning Cash Balance __________________________________________________ Ending Cash Balance

2 objective of closing the books

1) nominal accounts Rev. Expense Divd. balance them to 0 2) transfer nominal account balance transfers to the retained earning account

fiscal year

A fiscal period consisting of 12 consecutive months.

post-closing trial balance

A list of permanent accounts and their balances after a company has journalized and posted closing entries.

Examples of equity accounts

Capital Stock Retained Earnings

The revenue recognition principle states that revenues are recorded when two main criteria have been met. One of those criteria is that the earnings process is substantially complete. What is the other criterion? Cash has been collected or collectability is reasonably assured. Revenue targets for the period have been reached. Standard forecasting procedures are implemented. Necessary documentation has been filed with the appropriate government agency.

Cash has been collected or collectability is reasonably assured. Correct! The revenue recognition principle states that revenues are recorded when two main criteria have been met: first, the earnings process is substantially complete (generally, a sale has been made or services have been performed); and second, cash has been collected or collectibility is reasonably assured.

journal entry 3 step process

Identify which accounts are involved. For each account, determine if it is increased or decreased. For each account, determine by how much it has changed.

Income Statement Equation

Net Income = Revenue - Expenses

Gross Profit

Net Sales - Cost of Goods Sold

Result of operations, net profits net earning as another way of saying

Net income which is a part of the income statement

PPE means what?

Property plant and equipment

What is the meaning of the term "debit"? Recording of an increase Recorded on the left side Recorded on the right side Recording of a decrease

Recorded on the left side Correct! In accounting, a "debit" is an entry made on the left side of an account.

accounting cycle steps

The four steps in the accounting cycle are as follows: Analyze transactions. Record the effects of transactions. Summarize the effects of transactions. Prepare reports.

Unearned Revenue

The liability created by receiving revenue in advance.

real accounts

The name given to balance sheet accounts because they are permanent and are not closed at the end of the period

Revenue Recognition Principle

The principle that companies recognize revenue in the accounting period in which the performance obligation is satisfied.

Transactional Analysis

The process of determining how an economic event impacts the financial statements

At the end of a period, what happens to balances existing in real accounts? They are added to the balances in the nominal accounts. They are closed to zero at the period's end. They are carried forward to the next period. They are subtracted from the balances in the nominal accounts.

They are carried forward to the next period. Correct! Balances existing in real accounts at the end of a period are carried forward to the next period

1 / 1 What is an example of an expense that fits under the heading "selling, general, and administrative expense"? Wages of company headquarters accounting staff Fees earned by providing services Purchase cost of inventory items bought from suppliers Cost paid for the use of someone else's money

Wages of company headquarters accounting staff

Multi-Step Income Statement

an income statement that contains subtotals to highlight important relationships between revenues and expenses...expense catorgized more

long term assets

assets that produce tangible benefits for more than one year

debit, credit

debit left, credit right

How do you close a dividend account to the retained earnings?

dividends are debits; to 0 them out we credits them to retained earnings to transfer Retained Earnings 100 dividends 100

How do you close a expense account to the retained earnings?

expense are debits; to 0 them out we credits them to retained earnings to transfer Retained Earnings 100 expenses 100

what statement has revenue expenses net income in it

income statement

What is unearned revenue classified as?

liability

What is revenue?

money obtained from goods or services

executory contract

no work has been done so no liability is recognized. This type of contract is called an executory contract, which means that it is an exchange of promises about the future.

Finacial activities

obtaining capital

paying employees paying rent sales of goods or Servies purchasing inventory paying taxes as it relates to the cash flow statement equations

operating activities

balance sheet time approach

point in time

account

provides an efficient way to categorize similar transactions. Thus, you may designate asset accounts, liability accounts, and owners' equity accounts.

Matching Principle

recognize expenses in the same period as the revenues they help to generate

Journal Entries

record every transaction, showing which accounts are changed and by what amounts

Accural Basis Accounting

reporting income when it is earned and expenses when they are incurred aka when economic performance is done

Net Income/Net loss

the difference between total revenue and total expenses when total revenue is greater After everything is paid expense and other obligation then what left is the money made play money

Ledger

the group of accounts maintained by a company

nominal accounts

the name given to revenue, expense, and dividend accounts because they are temporary and are closed at the end of the period; these account are closed to 0 and transfer to the retained earning at the end of year