Financial accounting CH 2

______ are used to accumulate and report the effects of each different business activity separately rather than combining the various types of activities together. Multiple choice question. Costs Accounts Income statements Dividends

Accounts

What is known as the Statement of Financial Position

Balance Sheet

Which line items appear on the statement of retained earnings? (Check all that apply.) Multiple select question. Cash Expenses Dividends ending balance of Retained Earnings Net Income Accounts Payable Revenue

Dividends ending balance of Retained Earnings Net Income

Ace Electronics had the following increases in the cash account during the month: $20,000 from owners for stock; $5,000 from sales to customers; and $15,000 borrowed from River Bank. Ace's revenue for the month was ______. Multiple choice question. $40,000 $15,000 $5,000 $25,000 $35,000 $20,000

$5,000

Ace Electronics sold $5,000 of goods to customers of which $3,000 has been collected. Using accrual accounting, Ace Electronics should report revenues of ______.

$5,000

Revenue always equals cash collections during the accounting period. ( True, False)

False

Which financial statement reports revenues and expenses? Statement of retained earnings Income statement Statement of cash flows Balance sheet

Income Statement

Which of the following statements are true about the balance sheet. (Select all that apply.) Multiple select question. It reports the assets, liabilities and stockholders' equity at a point in time. It is sometimes called the statement of financial position. It reports the economic resources and claims on those resources. It reports the changes in the assets, liabilities and stockholders' equity during the accounting period.

It reports the assets, liabilities and stockholders' equity at a point in time. It is sometimes called the statement of financial position. It reports the economic resources and claims on those resources.

The main reason companies exist is to maximize their ______. (Check all that apply.) Multiple select question. owners' wealth expenses legal liability profits

Owners' wealth Profits

Which of the following statements are true? Multiple choice question. Common Stock increases when a company earns a profit. Retained Earnings increases when owners give a company money in exchange for stock. Retained Earnings increases when a company earns and keeps its profit.

Retained Earnings increases when a company earns and keeps its profit

A single-step income statement includes which of the following? (Select all that apply.) Multiple select question. Retained Earnings Revenues Dividends Net Income Expenses Assets Liabilities

Revenues Net Income Expenses

The equation for the income statement is ______-_____=_____ _______

Revenues-Expenses= Net Income

A ________-_________income statement reports a single measure of income. It reports the difference between total revenues and total expenses.

Single Step

expenses are reported on the

income statement in the time period in which they are incurred

Retained earnings are ______.

increased by net income decreased by dividends

A corporation earns profits for its stockholders by ______. (Check all that apply.) Multiple select question. providing services at more than cost ensuring revenues are less than expenses issuing stock to them for cash selling goods at more than their cost

providing services at more than cost selling goods at more than their cost

The financial reports of a business include only the activities of the business and not the personal dealing of its stockholders. This is:

the separate entity assumption

Accounts are: used to accumulate and report the effects of each different business activity. listed only on the income statement, but not on any other financial statement. used only by the largest corporations.

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

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

True

The unit of measure concept is the idea that a company should report its financial results on its financial statements using ______. a consistent time period a relevant unit of measure for each account such as dollars for Cash but number of units for Inventory various currencies depending on where each transaction originated a single monetary unit, such as the US dollar

a single monetary unit, such as the US dollar

A company owns an economic resource that will provide it with future benefits. This economic resource is ______. revenue a liability retained earnings net income an expense an asset

an asset

What does the Balance Sheet report

assets, liabilities, stockholders equity