Accounting - Financial Accounting: Information for Decisions - Wild 9e Introducting Financial Statements
Select internal users of accounting information from the choices below
Researching and development managers Purchasing managers Human resource managers Production managers Distribution managers Marketing managers Service manager
Net Income Formula
Revenues - Expenses = Net Income
Which of the following statements is correct regarding revenues?
Revenues cause equity to increase
The correct definition of revenue is
Revenues increase equity and are earned from the sale of products and services
Identify the broad opportunity areas of accounting.
Taxation Managerial Financial
Identify the roles of the International Accounting Standards Board (IASB) and International Financial Reporting Standards (IFRS)
The IASB issues IFRS to increase comparability of accounting reports between companies in different countries. The IASB and the FASB are trying to create a single set of accounting standards for global use. The IASB issues IFRS that identify preferred accounting practices.
The heading of every financial statement contains:
The company name Title of the statement Date or time period the financial statement covers
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.
The correct definition of a balance sheet includes which of the following statements
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. The statement reports the equality of the accounting equation at any point in time.
Private Accounting
This area of accounting is where employees work for a business
A corporation's equity has two main parts. Identify these two parts
a) Retained Earnings c) Contributed Capita
A(n) _____________ is a business entity legally separate from from its owners, also called shareholders
corporation
When using the accounting equation, recording the purchase of equipment for cash would include an increase to the (cash/equipment/supplies) account and a decrease to the (cash/equipment/supplies) account
equipment, cash
The principle that states that a company should report the details behind the financial statements which would impact users' decisions is called the
full disclosure principle
The accounting assumption which presumes that a business will continue operating is
going-concern
ABC Co. performs $200 of services for a customer, but does not get paid right away. Demonstrate how ABC Co. would record this transaction in the accounting equation by completling the following sentence
ABC Co. would increase the Accounts Receivable account and increase the revenue account in the accounting equation
Both public and private accounting
Accounting specialists in the this area of accounting are highly regarded
Given the following list of accounts, identify which are classified a liabilities.-Accounts payable-Notes Payable-Taxes Payable-Wages payableOwner's WithdrawalsAccounts ReceivableCashOwner's Capital
Accounts payable Notes Payable Taxes Payable Wages payable
The Dodd-Frank Act has two notable provisions: Select all that apply
Clawback and Whistleblower
Which list of accounts below, identifies only accounts that would appear on a balance sheet.
Common Stock, Equipment, Accounts Payable
Dividends
Decrease equity and are the assets removed from the company and paid to the stockholders.
Expenses
Decrease equity and are the cost of assets or services used to earn revenue
During September, Sall's Hair Salon purchansed $900 of suplies on account. In October, Sall's wants to make a payment of $200 on this bill. Record the October transation into Sall's accounting equation by:
Decreasing Account Payable $200 Decreasing Cash $200
From the following statements, select the one that descibles the effect of dividends on equity
Dividends cause equity to decrease.
Describe the effect of expenses on equity.
Expenses cause equity to decrease
The SEC has delegated the task of standard setting to:
Financial Accounting Standards Board (FASB)
Revenues
Increase equity and are the assets earned from a company's earning activities
Public Accounting
This area of accounting includes offering tax advice services and auditing services
An internal user of accounting information is:
a) a user who is directly involved in managing and operating an organization. b) a marketing manager e) a human resource manager
When recording transactions into the accounting equation, which of the following statements are correct?
b) the accounting equation must always remain in balance c) at least two accounts will be affected when recording a transaction d) after recording the transaction, total assets will always equal total liabilities plus equity
Dividends of $60 cash are paid to the corporation's stockholders. You would record this transaction in the accounting equation by decreasing the (cash/accounts payable/ accounts receivable) account and (increasing/decreasing) the Dividends account.
cash, increasing
The accounts payable account is a ______ account
liability
statement of owners equity
Reports the changes in equity during a period of time
Given that Jacob's Chocolatess Company had beginning retained earnings of $4000; net income during the period of $10,000; and dividends of $300 calculate the ending balance in the retained earnings account
$13,700
Define a liability.
A creditor's claims against the assets of a business-The company obligations to provide assets, products, or services to others-An amount owed to a creditor
Income Statement
Reports the revenues and expenses incurred by aI business for a period of time
A customer of Landen Consulting makes $400 payment of cash on a bill for services provided last month. Record this transaction into the accounting equation of Landen Consulting by:
-Increasing cash, $400 -Decreasing Accounts Receivable, $400
Identify the correct deinition of an asset
An asset is something of value that a business owns or controls
What is a shareholder?
An owner of a corporation
The expanded accounting equation is defined as:
Assets = Liabilities + Common Stock + Revenues - Expenses - Dividends
Which of the following correctly depicts the accounting equation
Assets = Liabilities + Equity
Identify the main sections of a statement of cash flows
Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities
Given the accounts below, choose all of the ones that affect equity.
Dividends, Revenues, Common Stock, Expenses
Melton's Door Company pays rent on the building facilities of $5000 on May1. Show how to record this transaction in the accounting equation of Melton's Door Company
Rent expense will be increased
Balance Sheet
Reports the balance of assets, liabilities and owner'sequity at a point in time
Define equity
Equity refers to the claims of the business's owners on the assets of a business
statement of cash flows
Identifies the cash inflows and outflows over a period of time
Jack Pickle decided to start a small business as a corporation. His initial investment was $4000 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.
Investments
Increase equity and are assets an owner puts into the business
Bob's Bakery receives its utility bill of $800 for the month and pays it immediately. Record this transation in the accounting equation
Increase expenses and decrease cash
Owner investments cause a(n) _______ in equity and are entered directly in the _________ account.
Increase; common stock
Russell's Consulting Services Company provided $1000 of services to the local college and immediately $700, but the college wants to pay the rest next month. Record this transaction in the accounting equation for Russell's Consulting Service by:
Increasing both cash and accounts receivable;and increasing revenue
Which statement below defines why accounting information is useful?
It identifies, records, and communicates business transactions.
How would you characterize a company's Accounts Receivable account
It is an asset account
Given the following list of accounts, identify which are classified as assets:Wages Payable, Land, Dividends, Building, Cash, Accounts Receivable, Common Stock, Supplies
Land, Building, Cash, Accounts Receivable, Supplies
A ___________ is a business entity legally separate from its owners who are called members
Limited Liability Company (LLC)
The three sections of the statement of cash flows includes all of the following:
Operating Activities Investing Activities Financing Activities
A ____________ is a business entity owned by one person
Proprietorship
On 8/1, supplies costing $500 were purchased on credit. Record this transaction in the accounting equation
increasing supplies, and increasing accounts payable
The three factors that must exist for a person to commit fraud include
opportunity, pressure, and rationalization
A(n) ___________ is a business owned by two or more partners
partnership
Complete the following statement regarding risk analysis. Higher risk implies higher, but riskier, expected (outcomes/returns/investment)
returns
An income statement describes a company's (assets/revenues) and (expenses/liabilities) along with the resulting net income or loss over a period of time due to earnings related activities
revenues, expenses
Given the statement below, choose the most accurate definition of owner investments
stock issuances
Which of the following correctly depicts the accounting equation
stock issuances
To record the purchase of supplies for cash, the correct entry into the accounting equation would include an increase to (equipment/supplies/cash) and a decrease to (equipment/supplies/cash)
supplies, cash