Financial Accounting Chapter 1

What appears on the statement of stockholders' equity?

Dividends, Beginning balance of retained earnings, Net income

what would be on a balance sheet

Equipment, Notes payable, Accounts receivable, common stock

Which items are found on an income statement?

Expenses + Revenues

Identify the three components of retained earnings.

Expenses, Dividends, Revenues

Which of the following items are found on a balance sheet?

Liabilities, Assets, Stockholders' equity

what is found on a balance sheet

Stockholders' equity, Liabilities, Assets

being paid for a service that has not yet been performed is considered and called

a liability; deferred revenue

record all transactions for a particular item describes a(n)

account

A(n) ______ is maintained for each financial statement item, whereas a(n) _____ contains all of the accounts of the company.

account; general ledger

providing a service and agreeing to accept payment later is considered and called

accounts receivable; an asset

a balance sheet shows

assets, liabilities and stockholders' equity account balances

The financial statement that displays a firm's financial position on a particular date is the

balance sheet

Which of the following financial statements shows a company's financial position on a particular date?

balance sheet

The purpose of a statement of cash flows is to provide information about the

cash receipts and cash disbursements during a period.

record a chronological listing of the accounts used by a particular company refers to a(n)

chart of accounts

The type of information included in an account includes

columns for debits and credits, the account title.

decreases in assets are referred to as debits or credits?

credits

if a company receives cash (asset), the balance of the cash account increases, we refer to the increase as

debit to cash

increases in assets are referred to as debits or credits?

debits

An general ledger account should have an account title, account number, a place for the date of the transaction, and two columns for

debits and credits

What is the effect of dividends on retained earnings?

decrease

Credits increase revenues, whereas debits increase

dividends, expenses, and assets

Stockholders' equity arises primarily from amounts invested by shareholders and amounts __

earned by the corporation

The financial statement that reports the company's revenues and expenses over an interval of time is the

financial statement

the fundamental activities of a business are

financing, investing, and operating activities

Which of the following contains a list of transactions affecting each account and the account's balance?

general ledger

provide in a single location the list of transactions affecting each account and the account's balance is the purpose of a(n)

general ledger

Where is the time period covered by the income statement found?

in the heading

The financial statement that is most useful in explaining a company's stock price performance is the

income statement

The financial statement that summarizes revenues and expenses for a period of time is the

income statement

we refer to increases in liabilities and stockholders' equity as _____ and decreases as _____

increase = credits, decrease = debits

What effect does revenue have on retained earnings?

increases

What is the effect of net income on retained earnings?

increases retained earnings

A chronological record of all economic events affecting a firm are recorded in a(n)

journal

a _____ contains all the individual accounts used by a company

ledger

debt represents the ___ side

left

In addition to the financial statements, which of the following must be included in the annual reports?

management discussion and analysis, notes disclosures

borrowing from a bank is considered a

notes payable; liability

Profits earned by a company that have not been paid to stockholders are called

retained earnings

Undistributed profits that have accumulated in the company over time are called

retained earnings

Consistent with the _______ recognition principle, companies record revenue at the time goods are provided to customers

revenue

What are the three components of retained earnings?

revenues, expenses, dividends

An income statement reports

revenues, expenses, net income

The financial statement that provides information about cash receipts and cash disbursements for the period is the

statement of cash flows

salaries can be classified under:

stockholders' equity

purpose of income statement

summarizes profit-generating activities for the period

Retained earnings represents

the total net income earned over the life of the company that has not been distributed as dividends.

A list of all accounts and their balances at a particular date showing that debits equal credits is referred to as a(n)

trial balance