accounting exam 1

stock

a ______ certificate is a legal document representing ownership in a corporation

accounts recievable

accounts _______ is an asset on the balance sheet that reports the amounts owed by customers for sales or services provided on credit

revenues

amounts earned by selling goods and services

expenses

amounts used to generate profits

payable; liability

an amount owed to a supplier for prior purchases on account is an account ______ which is a _______ account

balance sheet and statement of cash flows

cash is reported on which of the following financial statements?

4

companies typically prepare _____ financial statements each accounting period.

liabilities

creditors' claims to economic resources

-stockholders' equity -retained earnings

dividends decrease_________

assets

economic resources that will provide future benefit

-includes the name of the company -indicates if the reported numbers are rounded to the nearest thousand or million -includes the time period covered

heading of an income statement _____.

-obtain financing -purchase assets

identify key activities necessary to start a business

corporations

income is taxed twice

income statement

reports the financial performance of the business during the current accounting period

balance sheet

reports the financial position of the business at a point in time

statement of cash flows

reports the operating, investing, and financing activities effect on cash

revenues

revenues_______ are earned by selling goods or services to customers and is the first line item reported on the income statement

1) sales revenue 2) salaries and wages expense 3) utilities expense 4) advertising expense 5) net income

single-step income statement

1) revenue 2) expenses 3) net income

single-step income statement items in the proper order from top to bottom

cash paid for supplies

statement of cash flows

balance sheet

supplies

income statement

supplies expense

Decrease in Liabilities

the effect on the accounting equation of paying suppliers for amounts owed includes a ________

-statement of retained earnings -balance sheet

the ending retained earnings balance appears on the ______

cash; common stock

the issuance of common stock is recorded with a debit to ________ and a credit to __________

make a profit

the primary goal of most companies is to ______.

-sole proprietorship -corporation -partnership

three common forms of business organizations include______.

-creditors -stockholders

two sources of financing for a new business are _______

financing and investing activities

typical steps needed before a business can start selling goods/ services to customers include_______

accounts are_____

used to accumulate and report the effects of each different business activity

liability; notes payable

when a company borrows from a bank by signing a formal agreement, an asset titled cash is increased and a ________ titled __________ is increased.

payable

when a company pays its supplier for amounts owed, its cash and accounts ________ are decreased

investing, operating, and financing

3 activities found on the statement of cash flows?

-partnerships have more than one owner -owners are personally responsible for the debts of the partnership, even if the debts are more than the amount owners have invested in the business

Key characteristics of a partnership?

retained earnings

Retained __________ represents the capital earned by the company

Sole Proprietorship

The owner is personally responsible for the debts of the business even if the debts are more than the owner has invested in the business

accounts

individual expenses are accumulated in separate _______.

partnerships

legal liability is the responsibility of two or more owners

on both the income statement and statement of retained earnings

net income is reported_____

partnerships and sole proprietorships

owners have unlimited liability

stockholders' equity

owners' claims to economic resources

retained earnings

profits earned by a company that have not been paid to stockholders at the end of an accounting period are called ________.

statement of retained earnings

reports the accumulation of profits kept by the business during the current accounting period with that of prior periods