ACCTG 201 - Exam #1

The accounting equations is: Assets=______+Stockholders' Equity

Liabilities

A company borrows $25,000 from a bank and signs a note. What accounts will be affected by this transaction and what is the effect?

Notes payable increases, Cash increases

Which financial statement shows a firm's financial position on a particular date?

balance sheet

Ending retained earnings is calculated as

beginning retained earnings + net income - dividends

Reporting revenues only when cash is received and expenses only when cash is pad is called the ______ basis of accounting

cash

The two primary functions of financial accounting are to:

communicate measurements to external parties, measure business activities

A business organization that issues shares of stock to its investors is a ________

corporation

The three most common forms of business organization are sole proprietorship, ____________ and __________

corporation and partnership

Assets that will be used up or converted to cash within the next year are _______ assets

current

To increase an expense account, you should ____ the expense account

debit

The sum of accounts with _______ balances must equal the sum of the accounts with _______ balances

debit and credit

Cash receipts that have been recorded in the company's accounting records but are not yet recorded by the bank are

deposits outstanding

After the accountant analyzes the impact of a transaction on the accounting equation, the next step in the measurement process is to

determine the accounts to debit and credit

A distribution of net income to owners is called a

dividend

The two sources of stockholders' equity are amounts

earned by the corporation and paid in from shareholders

Purchasing inventory from suppliers, borrowing money from the bank, and paying salaries to employees are examples of _________ transactions

external

Selling stock to an investor is a ______ activity

financing

Which financial statement reports revenues and expenses?

income statement

When a company earns net income, its retained earnings

increase

Any amount owed to a creditor is classified in the balance sheet as a

liability

With respect to current assets, _________ refers to how quickly an asset can be converted to cash

liquidity

Long-term assets are expected to provide benefits for

more than one year

Which of the following appears on the statement of stockholders' equity?

net income, dividends, beginning balance of retained earnings

The statement of stockholders' equity is

one of the four required financial statements

The statement of cash flows includes:

operating, investing, and financing activities

The process of transferring information from a journal entry to the specific accounts affected in the general ledger is referred to as _______

posting

The purpose of a journal is to

record a chronological listing of every transaction for a company

The accumulated net income earned since the inception of the corporation and not yet paid to shareholders is referred to as _____ ______

retained earnings

______ is the amount recorded as a result of the sale of products or services to customers.

revenue

The two major categories reported in the income statement are

revenue and expenses

Net income equals

revenues - expenses

The income statement contains:

revenues and expenses

The types of accounts which affect retained earnings are

revenues, expenses, dividends

a petty cash fund is used for

small amounts of cash needed for low-cost items

For a corporation, the owners' claims to the resources of a company are called

stockholders' equity

The accounting equation is: Assets=Liabilities+_______

stockholders' quity

Which of the following items are found on a balance sheet

Assets, liabilities and stockholders' equity

True of false: A balance sheet is a list of all accounts and their balances showing that debits equal credits

False

What is the accounting equation?

Assets = Liabilities + Stockholders' Equity

What are the three components of retained earnings?

Revenues, expenses, dividends

The basic ______ ______ is referred to as the fundamental model of business valuation

accounting equation

Management discussion and analysis and note disclosures to the financial statements are included in the ______ ______

annual report

An ______ is a resource, such as cash, land, or buildings, that is owned by a company

asset

The balance sheet contains:

assets, liabilities, and stockholders' equity

The heading of a balance sheet for the 2018 fiscal period would include which of the following

the name of the business, December 31, 2018, the title "balance sheet"

A list of all accounts and their balances at a particular date showing that debits equal credits is referred to as a ______ _______

trial balance