Accounting Smart book 1

Which of the following are true about the income statement?

Revenues are listed before expenses. 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. Net Income has a double underline.

Companies typically prepare Blank______ financial statements each accounting period.

4

_____ are measurable amounts that the company owes to creditors. (Enter only one word per blank.)

Liabilities

The primary goal of most companies is to ______.

Make a profit

Which line items appear on the statement of retained earnings? (Check all that apply.)

Net Income Dividends ending balance of Retained Earnings

Which financial statement reports the operating, investing and financing activities affect on cash?

Statement of cash flows

The heading of an income statement ______. (Select all that apply.)

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

A financial statement heading states that it was prepared: "For the Year Ended December 31, 2020." What types of financial statements could this be?

income statement statement of cash flows statement of retained earnings

The heading of an income statement ______. (Select all that apply.)

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

The statement of retained earnings reports the amount:

of earnings kept by the company of earnings distributed to the company's owners during the accounting period

An asset is an amount Blank______, while a liability is an amount Blank______.

owned; owed

The main reason companies exist is to maximize their ______.

owners' wealth profits

Identify the primary ways in which a business may be organized.

partnership corporation sole proprietorship

Businesses earn profits by ______.

providing service or selling goods at more than the cost to provide the service or deliver the goods having revenues greater than expenses

The unit-of-measure assumption states that ______.

results of business activities should be reported in an appropriate monetary unit

Accounts Receivable is ______.

the amount the company expects to collect for previous credit sales

An income statement is referred to as a single-step income statement because ______.

the format separates total revenues from expenses and reports a single measure of income

Accounts are:

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

An income statement includes which of the following item(s). (Select all that apply.)

expenses net income revenues

The underlying rules of accounting in the US are called ______.

generally accepted accounting principles (GAAP)

Businesses earn profits by ______.

having revenues greater than expenses providing service or selling goods at more than the cost to provide the service or deliver the goods

Creditors want to see that a company that owes them money has ______.

assets that are greater than its liabilities

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

The balance sheet reports ______.

assets, liabilities and stockholders' equity at a specific point in time

Ace Electronics paid $4,000 of the $5,000 its employees had earned during the period. Ace Electronics should report Wages Expense of $5,000 on the income statement and Wages Payable of ______ on the balance sheet prepared in accordance with generally accepted accounting principles.

$1,000

Noodlecake purchased $2,000 of equipment and promised to pay for it next month. Noodlecake will report a $2,000 ______.

Account Payable

Ace Electronics received $200 of copy paper from its supplier and promised to pay for it next month. Ace should report ______.

Accounts Payable of $200 on its balance sheet

When a company is owed for sales made to customers on credit, the asset called:

Accounts Receivable will be reported on the balance sheet.

Which of the following is the basic accounting equation?

Assets = Liabilities + Stockholders' Equity

Which of the following statements are true: Supplies are assets, but equipment is a liability. Supplies are purchased from suppliers, while equipment is donated by stockholders. Equipment is furniture or machinery that can be used for years. Supplies are assets that can be used in the process of earning revenue in the near future.

Equipment is furniture or machinery that can be used for years. Supplies are assets that can be used in the process of earning revenue in the near future.

Revenue always equals cash collections during the accounting period.

False

True or false: Financial statements must have a year end of December 31.

False

The heading of a balance sheet should include which of the following? (Check all that apply.)

The title "Balance Sheet" At December 31, 2020 The name of the business

The unit of measure concept is the idea that a company should report its financial results on its financial statements using ______.

a single monetary unit, such as the US dollar

Individual expenses are accumulated in separate _____ (Enter only one word per blank.)

accounts

Which of the following statements are true regarding the income statement? Income statements ______. (Select all that apply.)

are sometimes called the statement of operations report revenues minus expenses

The balance sheet balances when ______.

assets equal liabilities plus stockholders' equity

An asset is defined as a(n) ______.

economic resource expected to benefit the company in the future

The order in which liabilities are reported on the balance sheet is based on when the liability is:

expected to be paid or settled.

Ace Electronics bought equipment for $4,000. Normally the equipment would have cost $4,500, but the supplier gave Ace a special discount. Ace's balance sheet should report equipment of ______.

$4,000

An amount owed to a supplier for prior purchases on account is an Account ______ which is a(n) ______ account.

Payable; liability

A single-step income statement includes which of the following? (Select all that apply.)

Revenues Expenses Net Income

Three common forms of business organizations include ______. (Select all that apply.)

Sole proprietorship, partnership, and the corporation