FINANCIAL ACCOUNTING FINAL REVIEW

At December 31, 2016 Keen Company had retained earnings of $1,292,000. During 2016 they issued stock for $49,000, and paid dividends of $17,000. Net income for 2016 was $201,000. The retained earnings balance at the beginning of 2016 was..?

$1,108,000

Gilkey Corp. began the year with retained earnings of $465,000. During the year, the company issued $630,000 of common stock, recorded expenses of $1,800,000, and paid dividends of $120,000. If Gilkey's ending retained earnings was $495,000, what was the company's revenue for the year?

$1,950,000

In the first month of operations, the total of the debit entries to the Cash account amounted to $1,200, and the total of the credit entries to the Cash account amounted to $900. The Cash Account has a

$300 debit balance

If total liabilities decreased by $75,000 and stockholders' equity increased by $25,000 during a period of time, the total assets must change by what amount and direction during that same period?

$50,000 decrease

Pinson Company began the year with retained earnings of $570,000. During the year, the company recorded revenues of $600,000, expenses of $380,000, and paid dividends of $140,000. What was Pinson's retained earnings at the end of the year?

$650,000

What are the generally accepted accounting principles? (GAAP)

Accounting rules that are recognized as a general guide for financial reporting

What are Operating activities?

Actually running the business

An accountant has debited as asset account for $900 and credited a liability account for $600. What can be done to complete the recording of the transaction?

Credit a different asset account for $300

In a Classified Balance Sheet, what four things are listed under Assets?

Current assets, Long-term investments, PPE, and Intangibles

What is the Accounting Equation?

Assets=Liabilities+Stockholders' Equity

In a Classified Balance Sheet, what if listed under Liabilities?

Current liabilities, and Long-term liabilities

Define Normal Balance?

Balance that should be in that specific account

What is on the Retained Earnings Statement?

Beginning retained earnings, net income, dividends, and ending retained earnings

Which principle says that expenses should be recorded with revenues?

Expense recognition priniciple

What are the three types of business activities?

Financing, Investing, and Operating

What are Investing activities?

Resources to operate the business

What is on the Income Statement?

Revenues, expenses and net income or loss

What is the primary difference between prepaid and accrued expenses?

Prepaid expenses have been recorded and accrued expenses have not.

Different companies using the same accounting principles in an application of

comparability

A company using the same accounting principles from year to year is an application of

consistency

An adjusting entry affects which financial statement(s)?

balance sheet and income statement

If a company buys a $700 machine on credit, the transaction will affect the

balance sheet only

Accounting is the information system that _____, _________, and ________the economic events of an organization to interested users.

identifies, records and communicates

The double-entry system requires that each transaction must be recorded

in two different accounts

Dividends appear on which financial statement(s)?

retained earnings statement

What is the primary purpose of a trial balance?

to prove equality of the debit and credit amounts after posting

Collection of a $600 AR increases what and decreases what?

increases an asset by $600 and decrease an asset $600

The purpose of the ledger is too?

keep in one place all info about changes in specific account balances

The Unearned Service Revenue account is classified as a(n)

liability

Jimmy's Repaid Shop started the year with total assets of $200,000 and total liabilities of $160,000. During the year the business recorded $420,000 in revenues, $220,000 in expenses, and dividends of $40,000. Stockholders' equity at the end of they year was..?

$200,000

What is an advantage of using the multiple-step income statement?

It highlights the components of net income

What is the beginning retained earnings for a new company?

0

What is internal control?

A plan that safeguards assets

What is the expanded basic accounting equation?

Assets+dividends+expenses=Liabilities+CS+revenues

What is on the Balance Sheet?

Assets, Liabilities and stock holders equity

What does ADE stand for?

Assets, dividends and expenses

What are the 9 steps of the recording process?

Analyze, journalize, post, trial balance, adjusting entries, adjusted trial balance, financial statements, closing entries and closing trial balance

Define Current Assets.

Assets that convert to cash or can be used up within 1 year of balance sheet date

What are Intangibles?

Assets that do not have physical substance

Define PPE.

Assets with long useful lives, being used

A journal provides what?

Chronological record of transactions

what is it called when two or more people come together for the purpose of circumventing prescribed controls?

Collusion

In a Classified Balance Sheet, what is listed under Stockholders' Equity?

Common stock and Retained earnings

The difference between sales revenue and cost of goods sold is what?

Gross profit

What does the custodian of a company asset do?

Holds on to the asset

What are the two groups of users?

Internal and External

Define a Long-Term investment?

Investments held longer than 1 year

Types of external users?

Investors, board of directors, creditors and customers

Types of internal users?

Managers, Supervisors and employees

Why do accounts need to be adjusted?

Many transactions affect more than one time period

What are Financing activities?

Money to run the business

Net income will result if gross profit exceeds what?

Operating expenses

What is on the Statement of Cash Flows?

Operating, Investing and financing activities

What is PPE?

Property, Plant and Equipment

What are the two fundamental qualities of useful information?

Relevance and faithful reprensentation

The right side of an account is the

The credit side

The left side of an account is

The debit side

What is book value?

The difference between the balance of a piece of equipment and its accumulated depreciation

An account consists of what?

Title, debit side and credit side

What is the primary difference between accrued revenues and unearned revenues?

Unearned revenues have been recorded and accrued revenues have not

When does the cash basis of accounting say revenue should be recognized?

When cash is received

When does the revenue recognition principle say that revenue should be recognized?

When the service has been performed

Merchandising companies that sell to retailers are known as what?

Wholesalers

The usual sequence of steps in the transaction recording process are?

analyze, journalize, post

Powers Corp. received a cash advance of $500 from a customer. As a result of this event,

assets increased by $500

If a company issues common stock for $40,000 and uses $30,000 of the cash to purchase a truck, them

assets will be increased by $40,000

Equipment costing $20,000 is purchased by paying $5,000 cash and signing a note payable for the remainder. The journal entry should include a

credit to Notes Payable

The historical cost principle requires that when assets are acquired, they be recorded at

the amount paid for them