accounting sb 1 intro

In a business liquidation, ______.

creditors may be unable to collect the full amount of the liabilities liabilities are paid in full before funds are distributed to owners

An event that causes one asset account to decrease and another asset account to increase is called an asset_______ transaction

exchange

The complete collection of a company's accounts is called the__________ ledger

general

The complete collection of a company's accounts is called the ______.

general ledger

The assumption that a business is able to continue its operations into the foreseeable future is the _________ _________ doctrine

going concern

The financial statement that shows all the benefits earned and sacrifices incurred during the accounting period is the ______.

income statement

The financial statement that shows all the revenues earned and expenses incurred during the accounting period is the ______.

income statement

An asset source transaction causes a(n) ______.

increase in an asset account and an increase in a liability or stockholders' equity account

Earning cash revenue by providing services to customers will cause the amount of cash to____________ and the amount of retained earnings to_____________

increase, increase

The Statement of Changes in Stockholder's Equity captures information related to the company's ______.

owners

Businesses have a(n)________function, which means that it has a duty to protect and use its assets for the benefit of the owner.

stewardship

Which of the following statements about assets are true?

1. A business may acquire assets from three sources including creditors, investors, and its operations. 2.Assets are resources used in the process of generating revenue.

Liabilities may be defined as ______.

1. sources of assets 2. obligations to repay creditors

Which of the following questions are correct?

Many procedures and practices used by accountants are based on a going concern assumption. The going concern doctrine assumes a business will continue operations into the foreseeable future.

Which financial statement(s) reports the effects of transactions on common stock and retained earnings?

Statement of Changes in Stockholders' Equity

Which of the following statements are true?

The right side of the accounting equation shows the sources of assets. The obligations of the business to creditors are shown on the right side of the accounting equation.

Detailed information about the accounting equation is maintained in records commonly called

accounts

revenue

as an increase in assets that results from providing goods and services to customers.

Ending balances for assets, liabilities, and stockholder's equity are reported on the

balance sheet

When a business borrows cash from a creditor, ______.

both assets and liabilities increase

The amount of cash dividends a company can pay are limited by the amount of the company's ______.

cash and retained earnings

A general ledger is a(n) ______.

complete list of a company's accounts

Green Company has $10,000 of assets. Fifty percent of the assets were acquired from the issue of common stock and thirty percent were acquired from earnings. Based on this information, the dollar value of liabilities must be ______.

$2000

Monster Media's (MM) accounting records indicate that the company has $500 of cash; $2,500 of land; $1,600 of common stock; and $1,400 of retained earnings. Based on this information, the maximum cash dividend the company can pay is ______.

$500. The company has only $500 cash available to pay dividends. There is no cash in retained earnings.

The accounting records of Direct Marketing Company (DMC) indicate that the company has $500 of cash; $3,500 of land; $1,000 of liabilities; $600 of common stock; and $2,400 of retained earnings. Based on this information, the percent of assets provided by earnings is ______.

60%

Which of the following is not a business asset?

An obligation to repay debt

Which items are presented on the statement of changes in stockholders' equity?

Beginning common stock Net income Dividends Total stockholders' equity Ending retained earnings

Which items are not presented on the statement of changes in stockholders' equity?

Cash, revenue, expense

True or false: All companies use the same number of accounts.

False

True or false: The sacrifices a company incurred in order to produce benefits during the period are reported on the statement of changes in stockholders' equity.

False

An asset use event causes a(n) ______.

decrease in an asset account and a decrease in a liability or stockholders' equity account

When a company pays cash to purchase land, the amount of cash ______.

decreases and the amount of land increases

When a company pays cash to purchase land, the total amount of assets and liabilities ______.

do not change

Businesses commonly acquire assets from ______.

earning revenue, borrowing from creditors, issuing common stock

When it is liquidated, a business has assets of $500 cash, $800 of liabilities and $400 common stock and ($700) deficit in retained earnings. Based on this information, ______.

owners will receive zero Reason: Owners are paid after creditors have been paid. Since there is nothing left after the creditors are paid, the owners will receive zero. creditors will receive $500 Reason: Creditors are paid first. However they cannot collect more money than the business has. Since the business has only $500, that is all that creditors can collect.