Accounting CH 1-4
Which of the following is the accounting equation?
Assets = Liabilities + Stockholders' Equity
Which financial statement reports the financial position of the business at a point in time?
Balance Sheet
The underlying rules of accounting the US are called _________ _________ ___________ principles.
generally accepted accounting
An initial public offering, IPO, is when a company ______.
issues shares that are traded on a stock exchange
Financial statements ______. (Select all that apply.)
may have a fiscal year end other than December 31, may be prepared more than once a year
What information appears on the statement of retained earnings?
net income dividends beginning balance of retained earnings ending balance of retained earnings
The unit-of-measure assumption states that ______.
results of business activities should be reported in an appropriate monetary unit
Profits that have accumulated in the company over time are blankk earnings.
retained
An income statement includes which of the following item(s).
revenues net income expenses
A corporation earns profits for its stockholders by ______.
selling goods at more than their cost, providing services at more than cost
Three common forms of business organizations include ______. (Select all that apply.)
sole proprietorship, partnership corporation
US GAAP are ______.
the accounting rules developed by the FASB for use in the United States
Accounts Receivable is ______.
the amount the company expects to collect for previous credit sales
The primary goal of most companies is
to make a profit
Accounts are ______.
used to accumulate and report the effects of each different business activity
Equation for income statement is
Revenue - Expenses = Net Income
The purpose of the balance sheet is to report the amount of ______.
assets, liabilities, and stockholders' equity at a specific point in time
The purpose of the balance sheet is to report the amount of ______. Multiple choice question.
assets, liabilities, and stockholders' equity at a specific point in time
Which financial statement reports the financial performance of the business during the current accounting period?
Income statement
Which of the following are the correct terms for the 3 activities found on the statement of cash flows?
Investing Financing Operating
A company started the month with $1000 of Retained Earnings. During the month, it had revenue 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 $
1000+(5000-4500)-100=1400
Companies typically prepare ______ financial statements each accounting period.
4
Individual expenses are accumulated in separate
Accounts
Pizza Aroma delivered $500 of pizzas to the local high school, but hasn't received payment yet. Pizza Aroma will report ______.
Accounts Receivable of $500
Which of the following are true about the income statement?
Each major caption has an underlined subtotal, such as Total Expenses. A dollar sign appears only at the top and bottom of the column of numbers. Revenues are listed before expenses. Net Income has a double underline.
True or false: Financial statements must have a year end of December 31.
False
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
Place the single-step income statement items in the proper order from top to bottom.
Revenues Expenses Net Income
Which of the following are financial statements? (Check all that apply.)
Statement of cash flows, Balance sheet, Statement of retained earnings, Income statement
Creditors would like a company that owes them money to have a large positive cash flow from operating activities.
True
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 ______.
US dollars
The balance sheet balances when ______.
assets equal liabilities plus stockholders' equity
Creditors want to see that a company that owes them money has _____
assets that are greater than its liabilities
