accounting

Net income equals

REVENUES - EXPENSES= NET INCOME

A company was recently formed with $50,000 cash contriubed to the company by stockholders for common stock. The company then borrowed $20,000 from a bank and bought $10,000 of supplies on account. The company also purchased $50,000 of equipment by paying $20,000 in cash and issuing a note for the remainder. What is the amount of total assets to be reported on the balance sheet? $110,000 $100,000 $90,000 None of the above

$110,000

Webby Corporation reported the following amounts on its income statement: service revenue, $32,500; utilities expense, $300; net income, $1,600; and income tax expense, $900. If the only other amount reported on the income statement was selling expenses, what amount would it be?

$29,700. (you add up revenue and expenses and subtract net income and get the selling expenses) (net income is what u r left w at the end).

Financial Statements

1. Income Statement 2. Statement of Retained Earnings 3. Balance Sheet 4. Statement of Cash Flows

Which account is LEAST likely to be debited when revenue is recorded? Accounts Payable Accounts Receivable Cash Deferred Revenue

Accounts Payable

Which of the following statements would be considered TRUE regarding debits and credits? In any given transaction, the total dollar amount of the debits and the total dollar amount of the credits must be equal. Debits decrease certain accounts and credits decrease certain accounts. Liabilities and stockholders' equity accounts usually end in credit balances, while assets usually end in debit balances. All of the above are true.

All of the above are true.

Which of the following would NOT be a goal of external users reading a company's financial statements? Understanding the current financial state of the company. Assessing the company's contribution to social and environmental policies. Predicting the company's future financial performance. Evaluating the company's ability to generate cash from sales.

Assessing the company's contribution to social and environmental policies.

Swing Hard Incorporated, which offers indoor golfing lessons in the northeastern United States, received $2,250 cash in February for 6 months of lessons beginning March 1st. Swing Hard recorded the cash received as a debit to Cash for $2,250 and a credit to Service Revenue for $2,250. Deferred Revenue for $2,250. Deferred Revenue for $1,875 and a second credit to Service Revenue for $375. Accounts Receivable for $2,250.

Deferred Revenue for $2,250.

Which of the following regarding GAAP is TRUE? GAAP is an abbreviation for generally applied accounting principles. Changes in GAAP always affect the amount of income reported by a company. GAAP is the abbreviation for generally accepted accounting principles. Changes to GAAP must be approved by the Senate Finance Committee.

GAAP is the abbreviation for generally accepted accounting principles.

Which of the following best describes how assets are listed on the balance sheet? In alphabetical order In order of magnitude, lowest value to highest value In the order they will be used up or turned into cash From least current to most current

In the order they will be used up or turned into cash

Which of the following items is NOT a specific account in a company's accounting records? Accounts Receivable Net Income Sales Revenue Deferred Revenue

Net Income

If a company incorrectly records a payment as an assets, rather than as an expense, how will this error affect net income in the current period? Net income will be too high. Net income will be too low. Net income will not be affected by this error. It's a mystery; nobody really knows.

Net income will be too high.

Spotlighter Incorporated borrowed $3,940 from a local bank on a note due exactly in twelve months. The journal entry to record this transaction is a debit to cash for $3,940 and a credit to Accounts payable for $3,940. Deferred revenue for $3,940. Notes payable - short term for $3,940. Notes payable - long term for $3,940.

Notes payable - short term for $3,940.

Stockholders' Equity

OWNERS CLAIMS TO THE BUSINESS RESOURCES COMMON STOCK RETAINED EARNINGS (EQUITY EARNED BY THE COMPANY)

Which of the following accounts normally has a debit balance? Deferred Revenue Rent Expense Retained Earnings Sales Revenue

Rent Expense

Which of the following regarding retained earnings is FALSE? Retained earnings is increased by net income. Retained earnings is a component of stockholders' equity on the balance sheet. Retained earnings is an asset on the balance sheet. Retained earnings represents earnings not yet distributed to shtockholders in the form of dividends.

Retained earnings is an asset on the balance sheet.

Which of the following is FALSE regarding the balance sheet? The accounts shown on a balance sheet represent the basic accounting equation for a particular business. The retained earnings balance shown on the balance sheet must agree with the ending retained earnings balance shown on the statement of retained earnings. The balance sheet summarizes the net changes in specific account balances over a period of time. The balance sheet reports the amount of assets, liabilities, and stockholders' equity of a business at a point in time.

The balance sheet summarizes the net changes in specific account balances over a period of time.

Which of the following is NOT one of the items required to be shown in the heading of a financial statement? The financial statement preparer's name The title of the financial statement The financial reporting date or period The name of the business entity.

The financial statement preparer's name

Which of the following is true regarding the income statement? The income statement is sometimes called the statement of operations. The income statement reports revenues, expenses, and liabilities. The income statement only reports revenue for which cash was received at the point of sale. The inocme statement reports the financial position of a business at a particular point in time.

The income statement is sometimes called the statement of operations.

Total assets on a balance sheet prepared on any date must agree with which of the following? The sum of total liabilities and net income as shown on the income statement. The sum of total liabilities and common stock. The sum of total liabilities and retained earnings. The sum of total liabilities, common stock, and retained earnings.

The sum of total liabilities, common stock, and retained earnings.

Which of the following statements regarding the statement of cash flows is FALSE? The statement of cash flows separates cash inflows and outflows into three major categories: operating, investing and financing. The ending cash balance shown on the statement of cash flows must agree with the amount shown on the balance sheet at the end of the same period. The total increase or decrease in cash shown on the statement of cash flows must agree with the "bottom line" (net income or net loss) reported on the income statement. The statement of cash flows covers a period of time.

The total increase or decrease in cash shown on the statement of cash flows must agree with the "bottom line" (net income or net loss) reported on the income statement.

The expense recognition principle ("matching") controls Where on the income statement expense should be presented. When revenues are recognized on the income statement. The ordering of current assets and current liabilities on the balance sheet. When costs are recognized as expenses on the income statement.

When costs are recognized as expenses on the income statement.

When should a company report the cost of an insurance policy as an expense? When the company first signs the policy When the company pays for the policy When the company receives the benefits from the policy over its period of coverage When the company receives payments from the insurance company for its insurance claims

When the company receives the benefits from the policy over its period of coverage

Accrual Basis Accounting

records revenues when earned and expenses in the same period as the revenues to which they relate, regardless of the timing of cash receipts or payments.

Balance Sheet

reports at a point in time: 1. assets 2. liabilities 3. stockholders equity (what is left over for the owners of the companys stock)

During the current month BSO Incorporated collected $2,000 from a customer for a sale that occured last month. BSO recorded this collection as a debit to Cash for $2,000 and a credit to

Accounts Receivable for $2,000

The T-account is used to summarize which of the following? Increases and decreases to a single account in the accounting system. Debits and credits to a single account in the accounting system. Changes in a specific account balance over time. All of the above describe how T-accounts are used by accountants.

All of the above describe how T-accounts are used by accountants.

Basic Accounting Equation

Assets = Liabilities + Stockholders' Equity

Which of the following is the entry to be recorded by a law firm when it receives a payment from a new client that will be earned when services are provided in the future? DEBIT Accounts Receivable; CREDIT Service Revenue DEBIT Deferred Revenue; CREDIT Service Revenue DEBIT Cash; CREDIT Deferred Revenue DEBIT Deferred Revenue; CREDIT Cash

DEBIT Cash; CREDIT Deferred Revenue

Which of the following is TRUE? FASB creates SEC. GAAP creates FASB. SEC creates CPA. FASB creates GAAP.

FASB creates GAAP.

If a publicly traded company is trying to maximize its perceived value to decision makers external to the corporation, the company is most likely to report too small a value for which of the following on its balance sheet? Assets Liabilities Retained Earnings Common Stock

Liabilities

When expenses exceed revenues in a given period, Stockholders' equity will not be impacted. Stockholders' equity will be increased. Stockholders' equity will be decreased. One cannot determine the impact on stockholders' equity without information abou the specific revenues and expenses.

Stockholders' equity will be decreased.

Which of the following is aTRUE statement? When a transaction is recorded in the accounting system, at least two effects on the basic accounting equation will result. When a transaction is recorded, both the balance sheet and income statement must be impacted. When a transaction is recorded, one account will always increase and one account will always decrease. None of these statements are true.

When a transaction is recorded in the accounting system, at least two effects on the basic accounting equation will result.

Quick Cleaners Incorporated received a $600 bill from the local utility company for the cost of electricity used durning the month of April. Quick Cleaners plans to pay this bill in May. The entry to record this transaction is a debit to Utility Expense and a credit to Cash for $600 a debit to Utility Expense and a credit to Accounts Receivable for $600 a debit to Accounts Payable and a credit to Utility Expense for $600 a debit to Utility Expense and a credit to Accounts Payable for $600

a debit to Utility Expense and a credit to Accounts Payable for $600

Which of the following is not an asset account? Cash Land Equipment Common Stock

common stock

Curent ratio equation

current ratio= current assets/ current liabilities

cash flows

summarizes how a business operating, investing, and financing activities caused its cash balance to change over a particular period of time,.

Which of the following is NOT one of the four basic financial statements? The balance sheet The audit report The income statement The statement of cash flows

the audit report

Liabilities

debts that you owe NOTES PAYABLE ACCOUNTS PAYABLE