Chapter 1 : Accounting

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

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

When a company is owned for sales made to customers on credit, the asset called ______.

Accounts Receivable will be reported on the balance sheet.

The Basic Accounting Equation

Assets = Liabilities + Stockholders' Equity

What is found on both the income statement and statement of retained earnings?

Net income

The three types of activities reported on the statement of cash flows are the _________ activities, ___________ activities, and ____________ activities.

operating, financing, investing

The unit-of-measure assumption states that:

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

What appears on both the statement of retained earnings and the balance sheet?

retained earnings

The financial reports of a business include only the results of that business's activities. this is ______.

the separate entity assumption.

Profits earned by a company that have NOT been paid to stockholder at the end of an accounting period are called?

Retained Earnings (equity earned by the company)

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

Financial Statements

May be prepared more than once a year May have a fiscal year end other than December 31

Alpha sold $2,000 of merchandise to Beta on credit. Beta promised to pay for it next month. Alpha will report a $2,000 _______.

Account receivable

the purpose of the balance sheet is to report the amount of ____.

Assets, liabilities, and stockholder's equity at a specific point in time

Dividends

Decrease retained earnings

true or false: A fiscal year ends on a date other than December 31. A calendar year end on December 31.

True. A company will typically pick a fiscal year end that is the start of its slow business period.

The balance sheet balances when ______.

assets equal liabilities plus stockholders' equity

Financial information is enhanced when it is:

comparable verifiable understandable timely