Accounting Ch. 1 SB

A company started the month with $1,000 of Retained Earnings. During the month, it had Revenue of $5,000 and Expenses of $4,500. It also distributed a Dividend of $100 to its stockholders. The company's Retained Earnings at the end of the period equals $________.

$1,400

Which of the following are ways of expressing the basic accounting equation? (Select all that apply.) - Assets + Liabilities = Stockholders' Equity - Assets = Liabilities + Stockholders' Equity - Assets - Stockholders' Equity = Liabilities - Assets + Stockholders' Equity = Liabilities - Assets - Liabilities = Stockholders' Equity

- Assets = Liabilities + Stockholders' Equity - Assets - Stockholders' Equity = Liabilities - Assets - Liabilities = Stockholders' Equity

Which of the following are found on a balance sheet? (Select all that apply.) - Cash - Notes Payable - Retained Earnings - Accounts Receivable - Revenues - Dividends - Expenses

- Cash - Notes Payable - Retained Earnings - Accounts Receivable

Which of the following are found on a balance sheet? (Select all that apply.) - Operating Activities - Liabilities - Stockholders' Equity - Expenses - Dividends - Financing Activities - Assets

- Liabilities - Stockholders' Equity - Assets

Which of the following are found on a balance sheet? (Select all that apply.) - Notes Payable - Common Stock - Expenses - Operating Activities - Supplies - Equipment - Financing Activities

- Notes Payable - Common Stock - Supplies - Equipment

Which of the following are found on a balance sheet? (Select all that apply.) - Stockholders' Equity - Operating Activities - Dividends - Expenses - Liabilities - Financing Activities - Assets

- Stockholders' Equity - Liabilities - Assets

The heading of a balance sheet should include which of the following? - The title "Balance Sheet" - For the Year Ended June 30, 2020 - For the Year Ended December 31, 2020 - The name of the business - At December 31, 2020

- The title "Balance Sheet" - The name of the business - At December 31, 2020

Retained earnings are ______. (Select all that apply.) - increased by dividends - equal to the company's cash balance - cash available to be paid to stockholders - decreased by dividends - increased by net income

- decreased by dividends - increased by net income

What information appears on the statement of retained earnings? (Select all that apply.) - ending balance of retained earnings - cash paid during the accounting period - net income - cash received during the accounting period - beginning balance of retained earnings - dividends

- ending balance of retained earnings - beginning balance of retained earnings - dividends

The heading of an income statement ______. (Select all that apply.) - states that it is for external users only - states that it was prepared in accordance with generally accepted accounting principles - includes the name of the company - indicates if the reported numbers are rounded to the nearest thousand or million - includes the time period covered

- includes the name of the company - indicates if the reported numbers are rounded to the nearest thousand or million - includes the time period covered

Retained earnings are ______. (Select all that apply.) - increased by net income - equal to the company's cash balance - decreased by dividends - cash available to be paid to stockholders - increased by dividends

- increased by net income - decreased by dividends

What information appears on the statement of retained earnings? (Select all that apply.) - net income - cash paid during the accounting period - beginning balance of retained earnings - dividends - ending balance of retained earnings - cash received during the accounting period

- net income - beginning balance of retained earnings - dividends - ending balance of retained earnings

Financial statements can be prepared ______. (Check all that apply.) - on a quarterly basis - on a monthly basis - only when the government allows - on a fiscal year basis - only at the end of a calendar year

- on a quarterly basis - on a monthly basis - on a fiscal year basis

Businesses earn profits by ______. (Check all that apply.) - issuing new stock shares to their owners - providing service or selling goods at more than the cost to provide the service or deliver the goods - borrowing from creditors - having revenues greater than expenses

- providing service or selling goods at more than the cost to provide the service or deliver the goods - having revenues greater than expenses

A corporation earns profits for its stockholders by ______. (Check all that apply.) - ensuring revenues are less than expenses - providing services at more than the cost - selling goods at more than their cost - issuing stock to them for cash

- providing services at more than cost - selling goods at more than their cost

A corporation earns profits for its stockholders by ______. (Check all that apply.) - issuing stock to them for cash - providing services at more than cost - ensuring revenues are less than expenses - selling goods at more than their cost

- providing services at more than cost - selling goods at more than their cost

The heading of an income statement should include ______. (Select all that apply.) - a heading formatted in any manner - the name of the person who prepared the statement - the date on which the statement was prepared - the name of the business - the title "Income Statement" - the accounting period covered by the statement

- the name of the business - the title "Income Statement" - the accounting period covered by the statement

Financial information is enhanced when it is ______. (Check all that apply.) - verifiable - timely - understandable - on a cash-basis - comparable - future-oriented

- verifiable - timely - understandable - comparable

Place these items in the order in which they appear on the statement of cash flows. - Cash Flows Provided by (used in) Investing Activities - Cash Flows Provided by (used in) Financing Activities - Cash Flows Provided by (used in) Operating Activities

1. Cash Flows Provided by (used in) Operating Activities 2. Cash Flows Provided by (used in) Investing Activities 3. Cash Flows Provided by (used in) Financing Activities

Prepare a statement of retained earnings for the month of September from top to bottom. - Dividends - Net income - Retained Earnings, September 1 - Retained Earnings, September 30

1. Retained Earnings, September 1 2. Net Income 3. Dividends 4. Retained Earnings, September 30

Prepare a statement of retained earnings for the month of September from top to bottom. - Net income - Retained Earnings, September 30 - Dividends - Retained Earnings, September 1

1. Retained Earnings, September 1 2. Net Income 3. Dividends 4. Retained Earnings, September 30

At December 31, Equate, Inc.'s assets equal $50,000 and liabilities equal $30,000. Stockholders' equity must equal $__________.

20,000

At December 31, Equate, Inc.'s assets equal $50,000 and liabilities equal $30,000. Stockholders' equity must equal $____________.

20,000

Ace Electronics paid $4,000 of the $5,000 its employees had earned during the period. Ace Electronics should report Wages Expense of $5,000 on the income statement and Wages Payable of ______ on the balance sheet prepared in accordance with generally accepted accounting principles. A. $1,000 B. $5,000 C. $0 D. $4,000

A. $1,000

Ace Electronics had the following increases in the cash account during the month: $20,000 from owners for stock; $5,000 from sales to customers; and $15,000 borrowed from River Bank. Ace's revenue for the month was ______. A. $5,000 B. $25,000 C. $15,000 D. $40,000 E. $20,000 F. $35,000

A. $5,000 Reason: Sales are revenues. Owner contributions, Common Stock, are included in stockholders equity and loans are included in liabilities.

Which of the following is the accounting equation? A. Assets = Liabilities + Stockholders' Equity B. Assets + Liabilities = Stockholders' Equity C. Revenue - Expenses = Net Income D. Revenue + Expenses = Net Income E. Assets = Liabilities + Net Income F. Assets - Liabilities = Net Income

A. Assets = Liabilities + Stockholders' Equity

Assets are reported on which financial statement? A. Balance Sheet B. Income Statement C. Statement of Cash Flows

A. Balance Sheet

Which financial statement reports revenues and expenses? A. Income statement B. Statement of cash flows C. Balance sheet D. Statement of retained earnings

A. Income statement

Which financial statement reports the financial performance of the business during the current accounting period? A. Income statement B. Statement of retained earnings C. Balance sheet D. Statement of cash flows

A. Income statement

Creditors want to see that a company that owes them money has ______. A. assets that are greater than its liabilities B. liabilities that are greater than its assets C. assets that are greater than its stockholders' equity D. borrowed money from many other people

A. assets that are greater than its liabilities

A net loss will ______. A. decrease retained earnings B. decrease cash C. increase retained earnings D. have no effect on retained earnings

A. decrease retained earnings

The underlying rules of accounting in the US are called ______. A. generally accepted accounting principles (GAAP) B. general accounting acts and policies (GAAP) C. financial accounting standards board D. internal revenue code (IRC)

A. generally accepted accounting principles (GAAP)

An asset is an amount ______, while a liability is an amount ______. A. owned; owed B. owed; owned

A. owned; owed

Accounts are ______. A. used to accumulate and report the effects of each different business activity B. used only by the largest corporations C. listed only on the income statement, but not on any other financial statement

A. used to accumulate and report the effects of each different business activity

Axis Company just bought a piece of land for $25,000. What a deal! The land next door was sold last month for $27,000. Axis immediately put the land back on the market for $29,000, but so far hasn't had any offers. This land would appear on Axis Company's balance sheet at a value of ______. A. $27,000 B. $25,000 C. nothing, because the land would be reported on the income statement, not the balance sheet D. $29,000

B. $25,000 Reason: Assets are initially reported based on their original cost to the company.

Net Income is reported on which financial statement? A. Balance Sheet B. Income Statement C. Statement of Cash Flows

B. Income Statement

Which financial statement reports the accumulation of profits kept by the business during the current accounting period with that of prior periods? A. Income statement B. Statement of retained earnings C. Balance sheet D. Statement of cash flows

B. Statement of retained earnings

The statement of retained earnings reports the ______. A. the creditors' and owners' claims to the company's resources B. profits that have accumulated in the company over time C. economic resources held by the company D. amount of cash collected from operations

B. profits that have accumulated in the company over time

An income statement is referred to as a single-step income statement because ______. A. the assets are reported separately from liabilities and reports a single measure of stockholders' equity B. the format separates total revenues from expenses and reports a single measure of income C. it reports only one accounting period of activity D. it is the first statement prepared of the 4 financial statements

B. the format separates total revenues from expenses and reports a single measure of income

Ace Electronics sold $5,000 of goods to customers of which $3,000 has been collected. Using accrual accounting, Ace Electronics should report revenues of ______. A. $3,000 B. $0 C. $5,000 D. $2,000

C. $5,000

Which financial statement reports the financial position of the business at a point in time? A. Income statement B. Statement of retained earnings C. Balance sheet D. Statement of cash flows

C. Balance sheet

Which of the following statements are true? A. Common Stock increases when a company earns a profit. B. Retained Earnings increases when owners give a company money in exchange for stock. C. Retained Earnings increases when a company earns and keeps its profit.

C. Retained Earnings increases when a company earns and keeps its profit.

Investing activities are reported on which financial statement? A. Balance Sheet B. Income Statement C. Statement of Cash Flows

C. Statement of Cash Flows

The balance sheet reports ______. A. revenues and expenses for the period B. the changes in assets, liabilities and stockholders' equity during the accounting period C. assets, liabilities and stockholders' equity at a specific point in time D. revenues and expenses at a specific point in time

C. assets, liabilities and stockholders' equity at a specific point in time

The order in which assets are reported on the balance sheet is based on when the asset is ______. A. paid for and consumed B. purchased C. expected to be used or turned into cash D. expected to be sold and collected

C. expected to be used or turned into cash

The statement of retained earnings is ______. A. necessary only if there have been recent owner contributions B. not required if the company has prepared a balance sheet which shows Retained Earnings C. one of the 4 financial statements D. not required if the company has prepared an income statement E. not required if the company has not paid a dividend this year

C. one of the 4 financial statements

Which financial statement reports the operating, investing and financing activities effect on cash? A. Income statement B. Statement of retained earnings C. Balance sheet D. Statement of cash flows

D. Statement of cash flows

Liberty, Inc., a US company, sold merchandise to Belle, a French company, for 10,000 euros. In Liberty's US financial statements, this sale should be reported in ______. A. euros B. old French francs C. either US dollars or euros D. US dollars

D. US dollars

The order in which liabilities are reported on the balance sheet is based on when the liability is ______. A. incurred B. acquired and expected to be expensed C. expected to be used in helping to generate revenues D. expected to be paid or settled

D. expected to be paid or settled

The primary goal of most companies is to ______. A. pay taxes B. reduce liabilities C. raise capital by issuing stock D. make a profit

D. make a profit

True or false: Revenue always equals cash collections during the accounting period.

False Reason: Revenues are recorded when the goods or services are provided even if the cash is not collected until a later accounting period.

True or false: The order of the heading of an income statement indicates the name of the statement first, the period of time covered, and the name of the company third.

False. Reason: The name of the company is first, followed by the statement name, and then the period of time covered by the income statement.

True or false: Net income equals the net amount of cash collected during the accounting period.

False: Net income does not equal cash collected because some revenues are collected and some expenses are paid in a later accounting period. Cash can increase from other activities, such as borrowing or owner contributions.

Accounts ________ is an asset on the balance sheet that reports the amounts owed by customers for sales or services provided on credit.

Receivable

__________ proprietorship, partnership, and _________ are the three primary forms of business organization.

Sole, corporation

The statement of retained earnings is ______. A. not required if the company has not paid a dividend this year B. one of the 4 financial statements C. not required if the company has prepared a balance sheet which shows Retained Earnings D. not required if the company has prepared an income statement E. necessary only if there have been recent owner contributions

one of the 4 financial statements