ACC 201 Accounting in Business

_____________Information and measurement system that identifies, records, and communicates relevant information about a company's business activities

Accounting

A(n) _____ user of accounting information does not directly run the organization

external

Examples of ___________ users are suppliers, banks, customers, investors, potential investors, and tax authorities

external

Generally accepted accounting principles (GAAP) wants information to have:

faithful representation relevance

Which statement below defines accounting? Multiple choice question. It contains a record of all transactions that cannot be measured in monetary units. It is essential to help make business decisions. It identifies, records, and communicates business transactions. It is helpful in comparing the performance of one company against a competitor.

It identifies, records, and communicates business transactions.

The _____ is the first financial statement to be prepared. statement of retained earnings balance sheet income statement

income statement

A graphical presentation of data to help people understand its significance and draw reliable inferences.

Data visualization

Jacob's Chocolates had beginning retained earnings of $4,000; net income of $10,000; and dividends of $300, calculate the ending balance in the retained earnings account. $14,300 $6,300 $13,700

$13,700

Visualization

A graphical presentation of data to help in understanding their significance is called data__________

Given the list of accounts below, identify which of them would appear on a balance sheet. (Check all that apply.) Rental Revenue Accounts Payable Retained earnings, 12/31 Utilities Expense Cash Rent Expense Supplies Equipment

Accounts Payable Retained earnings, 12/31 Cash Supplies Equipment

When recording transactions into the accounting equation, which of the following statements are correct? (Check all that apply.) After recording the transaction, total assets will always equal total liabilities plus equity. The accounting equation must always remain in balance. Cash must always equal Equity. Expenses are listed on the right side of the accounting equation and will increase the equity account.

After recording the transaction, total assets will always equal total liabilities plus equity. The accounting equation must always remain in balance.

Identify the correct definition of an asset: An asset refers to the claims of the owners An asset is a resource that a business owns or controls An asset is an amount owed to a creditor

An asset is a resource that a business owns or controls

Smith Company purchased $100 of supplies for her business and paid immediately. She would record this transaction in the accounting equation by which of the following? Increase Cash; increase Supplies. Decrease Cash; increase Supplies. Increase Cash; increase Expenses. Increase Supplies; increase Revenues.

Decrease Cash; increase Supplies.

True or false: Return on assets is computed as Net Income divided by Total Assets.

F

Describe the order in which a company prepares financial statements.

Income Statement Statement of Retained Earnings Balance Sheet Statement of Cash Flows

Given the statements below, choose the most accurate definition of dividends. Outflows of cash or other assets paid to the owners of a corporation Assets earned from a company's earning activities Cash or other assets an owner puts into the business Cost of providing products or services to customers Resources owned or controlled by a company

Outflows of cash or other assets paid to the owners of a corporation

Which of the statement(s) below define(s) an asset? (Check all that apply.) Resources controlled by the business An amount owed to the owners An amount owed to a creditor Resources with expected future benefits An amount owned

Resources controlled by the business Resources with expected future benefits An amount owned

Identify which of the following lists of accounts would belong on the statement of retained earnings. Retained earnings and Cash Service Revenue and Wages Expense Dividends and Account Payable Retained earnings and Dividends

Retained earnings and Dividends

Given the accounts below, choose all of the ones that affect equity. (Check all answers that apply.) Accounts Payable Revenues Common Stock Dividends Cash Expenses Notes Payable

Revenues Common Stock Dividends Expenses

Which of the following statements below lists the rules of entering transactions into the accounting equation? Transactions entered into the accounting equation must involve cash and an equity account. An asset account and a liability account are always affected. The accounting equation must always remain in balance so that assets always equal the sum of liabilities and equity. The accounting equation can be out of balance only when payment will be received at a future date.

The accounting equation must always remain in balance so that assets always equal the sum of liabilities and equity.

What are Generally Accepted Accounting Principles? Regulations designed to promote strong ethical conduct. Regulations companies must follow in order to be publicly traded. Minimum requirements for becoming a CPA. The concepts and rules that govern financial accounting practice.

The concepts and rules that govern financial accounting practice.

Which of the following statements explain(s) how the accounting equation applies to businesses? (Check all that apply.) The relation of assets, liabilities and equity is reflected in the equation. The equation states that Revenues - Expenses = Assets. The equation applies to all transactions and events. The equation reflects that the total of what a business owns at any point in time will equal the total of what it owes creditors and owners. The equation states that Assets = Liabilities + Equity. The equation reflects the fact that, at any point in time, total revenues will always equal total liabilities and assets.

The relation of assets, liabilities and equity is reflected in the equation. The equation applies to all transactions and events. The equation reflects that the total of what a business owns at any point in time will equal the total of what it owes creditors and owners. The equation states that Assets = Liabilities + Equity.

The correct definition of a balance sheet includes which of the following statements? The statement reports the financial position of a company at a point in time. The statement reports revenues and expenses over a period of time. The statement reports the equality of the accounting equation at any point in time. The statement reports assets, liabilities and equity at a point in time. The statement explains the changes in equity over a period of time.

The statement reports the financial position of a company at a point in time. The statement reports the equality of the accounting equation at any point in time. The statement reports assets, liabilities and equity at a point in time.

Which of the following statements best represents the accounting equation? The equation may sometimes be out of balance at the end of a year. The total of everything owned by a business must always equal the total of what the business owes to creditors and owners. The owners' rights are equal to the creditors' rights. The equation monitors the legal agreements made with creditors and what is owed to them at any point in time.

The total of everything owned by a business must always equal the total of what the business owes to creditors and owners.

Why is accounting so important to companies?

We live in an information age in which accounting info impacts us all

A process of analyzing data to identify meaningful relations and trends is called data ___________

analytics

The FASB conceptual framework consists of all of the following except: qualitative characteristics recognition and measurement elements concepts objectives

concepts

The statement of retained earnings explains changes in equity from net income (or loss) and from any ______ over a period of time. (Select the accounts below which will correctly complete this question.) Multiple choice question. revenues liabilities dividends

dividends

Sally Smith decided to start a sea shell business organized as a corporation. Her initial investment in the business consisted of $10,000 in cash in exchange for common stock. Record this transaction in the accounting equation of the new business by: increasing Cash; increasing Common Stock decreasing Cash; increasing Common Stock. increasing Cash; increasing Expenses. increasing Accounts Payable; increasing Revenues.

increasing Cash; increasing Common Stock

According to the fraud triangle, the three factors that must exist for a person to commit fraud include __, __, and __.

pressure or incentive opportunity rationalization