Accounting Chapter 1

Given that Jacob's Chocolates had owner investments of $4,000; net income during the period of $10,000; and owner withdrawals of $300 calculate the ending balance in the owner's capital account: Word Bank: $13,700 $6,300 $14,300

$13,700

When recording transactions into the accounting equation, which of the following statements are correct? Word Bank: -After recording the transaction, total assets will always equal total liabilities plus owner's equity -Cash must always equal Owner's Equity -Expenses are listed on the right side of the accounting equation and will increase the owner's equity account -The accounting equation must always remain in balance

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

The three factors that must exist for a person to commit fraud include:

-Opportunity -Pressure -Rationalization

Which of the following statements explain(s) how the accounting equation applies to businesses? Word Bank: -The equation applies to all business transactions -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 relation of assets, liabilities and equity is reflected in the equation. -The equation states that Assets=Liabilities + Equity -The equation states that Revenues-Expenses=Assets

-The equation applies to all business transactions -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 relation of assets, liabilities and equity is reflected in the equation.

Which of the following statements explain(s) how the accounting equation applies to businesses? Word bank: -The equation applies to all business transactions -The equation reflects the fact that, at any point in time, total revenues will always equal total liabilities and assets. -The equation states that Assets=Liabilities + Equity -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 Revenues - Expenses = Assets -The relation of assets, liabilities, and equity is reflected in the equation

-The equation applies to all business transactions -The equation states that Assets=Liabilities + Equity -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 relation of assets, liabilities, and equity is reflected in the equation

What term corresponds with this term. *A business owns will always equal what it owes to creditors and owners.

Accounting equation

Why is accounting important?

Accounting information impacts us all

A resource that a business owns or coontrols

Asset

An assessment of whether financial statements follow GAAP

Audit

To record the purchase of supplies for cash; the correct entry into the accounting equation would include an increase to (equipment/supplies/cash) (BLANK 1) and a decrease to (equipment/supplies/cash) (BLANK 2)

Blank 1:supplies Blank 2:cash

Identify the correct assumption. *A business is accounted for separately from other business entities and its owner

Business entity assumption

Accounting certification include: Word bank: IFRS CPA GAAP SEC

CPA

Is it an identifying, recording, or a communicating activity. *Interpreting information from financial reports

Communicating

Is it an identifying, recording, or a communicating activity. *Preparing financial statements for creditors

Communicating

Is it an identifying, recording, or a communicating activity. *Presenting financial information

Communicating

Is it an identifying, recording, or a communicating activity. *Analyzing and interpreting reports

Communicating

Is it an identifying, recording, or a communicating activity. *Preparing financial statements

Communication

Determine if it is a sole proprietorship, partnership, corporation, or limited liability company (LLC). *AJ Company pays a business income tax and has two owners

Corporation

Determine if it is a sole proprietorship, partnership, corporation, or limited liability company (LLC). *Micah and Nancy own Financial Services, which pays a business income tax. Micah and Nancy do not have personal responsibility for the debts of Financial Services.

Corporation

Determine if it is a sole proprietorship, partnership, corporation, or limited liability company (LLC). *Ownership of Zander Company is divided into 1,000 shares of stock. The company pays a business income tax.

Corporation

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

Dataa analytics

Identify the impact of each of the given transactions (increase or decrease asset, liabilities or equity). *The company pays workers for wages earned

Decrease in assets and decrease in equity

Identify the impact of each of the given transactions (increase or decrease asset, liabilities or equity). *The company pays cash toward an account payable

Decrease liabilities and decrease asset

Sally Smith purchases $100 for her business and paid immediately. She would record this transaction in the accounting equation by which of the following? Word Bank: -Increase Supplies; Increase Revenues -Increase Cash; Increase Expenses -Decrease Cash; Increase Supplies -Increase Cash; Increase Supplies

Decreases cash; increase supplies

Principles that determine whether an action is right or wrong

Ethics

Classify the following business activities (events, internal transactions, or external transactions). *Happenings that affect the accounting equation

Events

Identify the correct principle. *A company records the expenses incurred to generate the revenue reported

Expense recognition principle

Are suppliers an internal or external user?

External information user

Is a customer an external or internal user?

External information user

Is the labor union an internal or external user?

External information user

Classify the following business activities (events, internal transactions, or external transactions). *Exchanges of value between two entities

External transactions

Identify if it is an internal or external user. *Creditor

External user

Identify if it is an internal or external user. *Politician

External user

Identify if it is an internal or external user. *Shareholder

External user

Identify if it is an internal or external user. *Should we buy, hold, or sell a company's stock

External user

Identify if it is an internal or external user. *Should we make a five-year loan to that business

External user

Identify if it is an internal or external user. *Which firm reports the highest sales and income

External user

A group that sets accounting principles in the United States

FASB

The organization that is primarily responsible for developing GAAP for use by all U.S. companies is the:

FASB

Generally accepted accounting principles (GAAP) wants information to have Word Bank: Faithful representation Rules Relevance Concepts

Faithful representation Relevance

Identify the correct principle. *A company reports the details behind financial statements that would impact user's decisions

Full-disclosure principle

The concepts and rules that govern financial accounting practice

Generally accepted accounting principles

Identify the correct assumption. *Presumes that the business will continue operating in the future

Going-concern assumption

The organization that is responsible for issuing International Financial Standards is the:

IASB

Is it an identifying, recording, or a communicating activity. *Acquiring knowledge of revenue transactions

Identifying

Is it an identifying, recording, or a communicating activity. *Entering a list of the sales, including the prices and quantities for the company recordkeeper

Identifying

Is it an identifying, recording, or a communicating activity. *Observing transactions and events

Identifying

The correct definition of an income states is: Word Bank: -The statement describes a business's revenues and expenses over a period of time. -The statement explains changes in equity over a period of time -The statement identifies cash inflows and outflows during a period of time. -The statement describes a company's assets, liabilities and owner's equity over a period of time.

Income Statement

The four basic finals statements are:

Income statement, statement of owner's equity, balance sheet, and statement of cash flows

Identify the impact of each of the given transactions (increase or decrease asset, liabilities or equity). *The owner invests cash in the business

Increase asset and increases equity

Jack Pickle decided to start a small business. His initial investment was $4,000. Demonstrates how to record this transaction in the accounting

Increase cash by $4,000; Increase J. Pickle, Capital by $4,000

Tyler invests $2,000 cash to form a consulting business set up as proprietorship. This transaction will: Word bank: Increases expenses by $2,000 Increase liabilities by $2,000 Increase equity by $2,000 Decrease equity by $2,000

Increase equity by $2,000

Identify the impact of each of the given transactions (increase or decrease asset, liabilities or equity). *The company purchases supplies for cash

Increases an asset and decreases an asset

Identify the impact of each of the given transactions (increase or decrease asset, liabilities or equity). *The company provides services for cash

Increases an asset and increases equity

Identify the impact of each of the given transactions (increase or decrease asset, liabilities or equity). *The company purchases equipment on credit

Increases asset and increases liability

Is a marketing manager a external or internal user?

Internal information user

Is a purchasing manager a external or internal user?

Internal information user

Classify the following business activities (events, internal transactions, or external transactions). Exchanges within an entity

Internal transactions

Identify if it is an internal or external user. *Distribution manager

Internal user

Identify if it is an internal or external user. *Human resources executive

Internal user

Identify if it is an internal or external user. *Production supervisor

Internal user

Identify if it is an internal or external user. *Purchasing manager

Internal user

Identify if it is an internal or external user. *Research and development executive

Internal user

Identify if it is an internal or external user. *Should we spend additional money for redesign of our product

Internal user

Identify if it is an internal or external user. *What are the costs of our product's ingredients

Internal user

Identify if it is an internal or external user. *What are the costs of our service to customers

Internal user

Identify if it is an internal or external user. *Which inventory items are out of stock?

Internal user

Determine if it is a sole proprietorship, partnership, corporation, or limited liability company (LLC). *Jeffy Auto is a separate legal entity from its owner, but it does not pay a business income tax.

Limited liability corporation (LLC)

(Blank) includes opportunities in general accounting, cost accounting and internal auditing Word Bank: Accounting-related Financial accounting Managerial accounting Taxation

Managerial accounting

The (blank) principles states that accounting information is based on actual cost.

Measurement

Identify the correct principle. *Accounting information is based on actual cost

Measurement principle

Identify the correct assumption. *Transactions and events are expressed in units of money

Monetary unit assumption

Amount a business earns in excess of all expenses and costs associated with its sales and revenues

Net income

Determine if it is a sole proprietorship, partnership, corporation, or limited liability company (LLC). *Riley and Kay own Speedy Packages, a courier service. Both are personally liable for the debts of the business.

Partnership

An employee that has unpaid bills might exhibit the following fraud factor:

Pressure

The majority of accounting opportunities are in (blank) accounting Word bank: Private Public Government Not-for-profit

Private

Accounting professional who provide services to many clients

Public accountants

Is it an identifying, recording, or a communicating activity. *Keeping a log of service costs

Recording

Is it an identifying, recording, or a communicating activity. *Measuring the costs of a product

Recording

Is it an identifying, recording, or a communicating activity. *Preparing and entering a list of checks issued

Recording

Is it an identifying, recording, or a communicating activity. *Registering cash sales of products sold

Recording

Is it an identifying, recording, or a communicating activity. *Using a cash register to enter sales

Recording

Which of the statement (s) below define(s) an asset? Word bank: Resources controlled by the business An owner's claim Resources with future benefits A resource owned A creditor's claim

Resources controlled by the business Resources with future benefits A resource owned

Identify the correct principle. *Revenue is recognized when goods are provided to the customer at the amount expected to be received

Revenue recognition principle

An income statement reports a company's net income or net loss during a period. Which of the following accounts would appear on an income statement? Word Bank: -Service Revenue -Account Payable -Rent Revenue -Wages Expense -Rent Expense -Cash

Services Revenue Rent Revenue Wages Expense Rent Expense

Determine if it is a sole proprietorship, partnership, corporation, or limited liability company (LLC). *IBC Services does not have separate legal existence apart from the one person who owns its.

Sole propietorship

Determine if it is a sole proprietorship, partnership, corporation, or limited liability company (LLC). *Physio Products does not pay a business income tax and has one owner. The owners has unlimited liability for business debt.

Sole propietorship

Determine if it is a sole proprietorship, partnership, corporation, or limited liability company (LLC). *Trent Company is owned by Trent Malone, who is personally liable for the company's debts.

Sole propietorship

Rules of entering transactions into the accounting equation.

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

On January 31, Jean Consulting Company receives a bill for that month's utilities in the amount of $500. Jean sets it aside because she does not plan to pay the bill until its due date of February 15. What effect, if any, does this events have on the company's accounting equation as of January 31? Word Bank: -The business must record this event, which would decrease cash and decrease equity on January 31. -The business must record this event, which would decrease cash and increase equity on January 31. -The business must record this event, which would increase liabilities and decrease equity on January 31. -Because the bill is set aside for payment in February, there would be no effect on the accounting equation as of January 31.

The business must record this event, which would increase liabilities and decrease equity on January 31.

Identify the correct assumption. *The life of the company can be divided into specific time periods

Time period assumption

A graphical presentation of data in understanding their significance is called date (blank)

Visualization