Accounting ch 1-3

The net profit margin ratio:

How much profit from each dollar of revenue

The financial statement that reports revenues and expenses is the:

Income statement

Salaries and Wages Expense appears on the ___________, while Salaries and Wages Payable is an:

Income statement: liability on the balance sheet

A company might report a negative cash flows from financing activities when:

It has paid a cash dividend to its stockholders

Every transactions involves a(n):

Receiving and giving something of value

In accordance with the expense recognition principle, expenses are recorded in the period the:

Related revenues are recorded

Information that always makes a difference in a decision is:

Relevant

In an expanded accounting equation, revenues and expenses are an expanded part of:

Retained earnings

In accrual accounting, according to the _____________ recognition principle, revenues should be recognized when they are earned, not necessarily when cash is received.

Revenue

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

Revenues

Supplies are expenses when:

Used

Pizza Aroma delivered $500 of pizzas to the local high school, but hasn't received payment yet. Pizza Aroma will report:

Accounts receivable of $500

Investors in stock of a company increase their wealth by receiving dividends and by:

An increase in the market value of their stock

Mauricio invested $30,000 in Pizza Aroma in exchange for its stock. Pizza Aroma now has:

Common Stock

T-Accounts represent a simplified version of the:

Ledger

Identify the account that may be used to record borrowing cash in exchange for promissory note.

Note Payable

Revenues are recognized when _____________ even when cash is collected in a different accounting period than the revenue is earned.

Services are performed

The creditors claims to a company's resources are represented by:

Total liabilities

Who has first claim to a business's assets should the company go out of business?

Creditors

Alpha sold $2000 of services to Beta on credit. Beta promised to pay for it next month. Beta will report a $2000:

Accounts Payable

Accounts Receivable are:

Amounts the company expects to collect for previous credit sales

What do independent auditors provide for companies who hire them?

Assurance that the financial statements follow Generally Accepted Accounting Principles (GAAP)

What does a business typically receive when it issues stock to owners?

Cash

When a business issues stock, what does it give to its owners?

Common stock

A difference between debt financing and equity financing is that:

Debt financing must be repaid: while repayment of equity financing is not required.

Under the accrual basis of accounting, the ___________ recognition("matching") principle requires that expenses be recognized in the same period as the related revenues.

Expense

Transactions are first entered in the:

Journal

The primary goal of a most companies is to:

Make a profit

Who has primary responsibility for making sure that a company's financial statements follow GAAP?

Management

In April, Pizza Aroma hired a new employee at the rate of $1,000 per month to start work at the beginning of May. In April, pizza Aroma should record:

Nothing, because an exchange of promises is not a transaction