ACG Chapter 1 SmartBook

Jacob's Chocolates had beginning retained earnings of $4,000; net income of $10,000; and dividends of $300, calculate the ending balance in the retained earnings account.

$13,700 $4,000 beginning balance + $10,000 net income - $300 dividends.

Sheldon Company had beginning retained earnings of $1,000, net income of $5,000, and dividends of $250. The ending balance in the retained earnings account is

$5,750

Describe the order in which a company prepares financial statements. Instructions

1. Income Statement 2. Statement of Retained Earnings 3. Balance Sheet

Identify what accounting is by selecting the correct statement.

Accounting is a system that identifies, records and communicates financial information.

When recording transactions into the accounting equation, which of the following statements are correct?

After recording the transaction, assets will always equal liabilities plus equity. The accounting equation must always remain in balance.

Identify the correct definition of an asset:

An asset is a resource that a business owns or controls

Given the list of accounts below, identify which of them would appear on a balance sheet.

Cash Equipment Supplies Retained earnings, 12/31 Accounts Payable

Given the accounts below, choose all of the ones that affect equity. (Check all answers that apply.)

Common Stock Dividends Expenses Revenues

Which list of accounts below, identifies only accounts that would appear on a balance sheet.

Common Stock, Equipment, Accounts Payable

Smith Company purchased $100 of supplies for the business and paid cash. Smith Company would record this transaction in the accounting equation by which of the following?

Decrease Cash; increase Supplies.

Which of the following statements describes the effect of expenses on equity?

Expenses cause equity to decrease

Which of the following statements describes the effect of expenses on equity?

Expenses cause equity to decrease.

Record the purchase of equipment for cash in the accounting equation would include an increase to the -------- account and a decrease to the ---------account.

Field 1: Equipment Field 2: Cash

To record the purchase of supplies for cash in the accounting equation, the company would increase---------and decrease---------

Field 1: Supplies, supplies, or Supply Field 2: Cash

Which of the following statements represent(s) how expenses affect equity?

Higher expenses result in lower total equity. If expenses increase, then total equity decreases.

Jack Pickle decided to start a small business as a corporation. His initial investment was $4,000 cash in exchange for common stock. Demonstrate how to record this transaction in the accounting equation.

Increase Cash by $4,000; Increase Common Stock by $4,000.

Which statement below defines accounting?

It identifies, records, and communicates business transactions.

Given the statements below, choose the most accurate definition of dividends.

Outflows of cash or other assets paid to the owners of a corporation

Which of the statement(s) below define(s) an asset?

Resources controlled by the business Resources with expected future benefits An amount owned

Identify which of the following lists of accounts would belong on the statement of retained earnings.

Retained earnings and Dividends

Which of the following statements below lists the 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.

Which of the following statements explain(s) how the accounting equation applies to businesses? (Check all that apply.)

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

Which of the following statements explain(s) how the accounting equation applies to businesses? Check all that apply.

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 applies to all transactions. 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? (Check all that apply.)

The relation of assets, liabilities and equity is reflected in the equation. The equation applies to all transactions and events. 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 correct definition of a balance sheet includes which of the following statements?

The statement reports the equality of the accounting equation at any point in time. The statement reports the financial position of a company at a point in time. The statement reports assets, liabilities and equity at a point in time.

Which of the following statements best represents the accounting equation?

The total of everything owned by a business must always equal the total of what the business owes to creditors and owners.

Which of the following statements best represents the reason for the accounting equation?

The total of everything owned by a business must always equal the total of what the business owes to creditors and owners.

Dividends are resources paid to the owners of a corporation.

True

Dividends are resources paid to the stockholders.

True

Identify which of the following statements is correct as to why accounting is important.

We live in an information age whereby accounting information impacts everyone.

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

analytics

The statement of retained earnings explains changes in equity from net income (or loss) and from any_________ over a period of time. (Select the accounts below which will correctly complete this question.)

dividends

An external user of accounting information

does not directly run the organization

______ user of accounting information does not directly run the organization.

external

The __ is the first financial statement to be prepared.

income statement

Sally Smith decided to start a sea shell business organized as a corporation. Her initial investment in the business consisted of $10,000 in cash in exchange for common stock. Record this transaction in the accounting equation of the new business by:

increasing Cash; increasing Common Stock

Jackson Company purchased office equipment costing $3,000 for his business and paid immediately. Record this transaction in the accounting equation by:

increasing Equipment; decreasing Cash

The accounts payable account is a(n) ----- account.

liability

The accounts payable account is a(n)________ account.

liability

When supplies are purchased on credit it means that:

the Accounts Payable account will be increased. a liability has been incurred. the business will pay for the supplies at a later time.

When supplies are purchased on credit it means that:

the Accounts Payable account will be increased. the business will pay for the supplies at a later time. a liability has been incurred.

A graphical presentation of data to help in understanding their significance is called data

visualization