Accounting

On 6/ 25, supplies costing $1,000 were purchased, but only $400 of this amount was paid on 6/ 25. The remainder of the bill went on account. To record this transaction on 6/ 25: Supplies would be increased by $1,000 Cash would be decreased by $400 and Accounts Payable would be increased by $600

-400 -1,000 -600

Liabilities

-A liability is an amount owed to a creditor -claims against the assets of a business -Company's obligation to provide assests, products and services

List of account, which are liabilities

-Accounts Payable -Notes -Wages -Taxes payable

when a business provides a service to a customer on credit it means that

-Accounts Receivable will be increased -an asset has been created or increased -the business will receive payment for its services at a later time

when recording transactions into the accounting equation

-At least two accounts will be affected when recording a transaction -After recording the transaction, total assets will always equal total liabilities plus equity -The accounting equation must always remain in balance

Identify the main sections on a statement of cash flows.

-Cash flows from operating activities -Cash flows from investing activities Cash flows from financing activities

Recall which of the following statements are true regarding U.S. GAAP and IFRS.

-IFRS is more focused on a review of the situation and how accounting can best reflect it. -a IFRS is more principles-based. -U.S. GAAP focuses on strictly following the accounting rules. -u.s gaap is more rule based

Which statement(s) below define(s) why accounting information is useful?

-It is essential to help make business decisions. -It records, summarizes and reports business transactions. -It is helpful in comparing the performance of one company against a competitor.

Identify the broad opportunity areas of accounting.

-Taxation -Managerial -Financial

Identify the roles of the International Accounting Standards Board and IFRS. (Check all that apply.)

-The IASB issues IFRS to increase comparability of accounting reports between companies in different countries. -The IASB and the FASB are trying to create a single set of accounting standards for global use. -The IASB issues IFRS that identify preferred accounting practices.

The correct definition of a balance sheet includes which of the following statements? (Check all that apply.)

-The statement reports the financial position of a company at a point in time. -The statement reports assets, liabilities and equity at a point in time. -The statement reports the equality of the accounting equation at any point in time.

An internal user of accounting information is

-a user who is directly involved in managing and operating an organization -a human resource manager. -marketing manager

why accounting is important

-accounting information summarizes or conveys information about a organizations business activities -accounting information identifies, communicates and records information about a business -owners, managers, creditors need reliable financial information to make decisions

ethics

-beliefs that distinguish right from wrong. -accepted standards of good and bad behavior.

Equity

-equal to assets-liabilities -claims of the owners on the assets of the business -accumulated revenue and owner investment minus the accumulated expenses and withdrawals since the company began

why accounting information is useful

-it records, summarizes and reports business transactions -it is essential to help make business decisions it is helpful in comparing the performance of one company against a competitor

Identify the main sections on a statement of cash flows. (Check all that apply.)

-operating activities -investing activities -financing activities

Choose all of the ones that effect equity

-owners capital -owners withdrawal -revenue -expenses -owners investment

The Dodd -Frank Act was passed to: Select all that apply.

-protect the taxpayer -promote accountability and transparency -protect consumers

given the lists of accounts below, identfiy which would appear on a balance sheet

-supplies -equipment -cash -capital -accounts payable

given that Jacob's Chocolates had owner investments of $4,000; net income during the period of $10,000; and owner withdrawals of $300 calculate the ending balance in the Owner's Capital account.

13,700

In every financial statement, there exists single and double underlines. Choose the statement below that describes what these are for and when to use them.

A single-ruled line denotes an addition or subtraction and double underlines indicate the final totals.

ABC Co. performs $200 of services for a customer, but does not get paid right away. Demonstrate how ABC Co. would record this transaction in the accounting equation by completling the following sentence

ABC Co. would increase the accounts RECEIVABLE account and increase the REVENUE account in the accounting equation.

Owner withdrawls

Assets an owner takes for personal use

Expenses

Decrease Equity but are necessary to earn Revenue

statement of cash flows

Identifies the cash inflows and outflows over a period of time

Revenues

Increase equity and are the assets or monies earned from a company's earnings activities

jackson programming company paid its june rent of $500. demonstrate how to use the accounting equation to record the transaction by completing the following sentence.

Jackson company would decrease CASH and increase EXPENSES in the accounting equation.

Identify which of the following lists of accounts would belong on the statement of owner's equity.

Owner's Capital and Owner's Withdrawal

Bob's Bakery is making a partial payment of $70 for baking supplies it purchased in a previous month.

Record this transaction in the accounting equation of Bob's Bakery by decreasing the Accounts Payable (Accounts Payable) account and decreasing the (Cash) account.

An income statement reports a company's net income or net loss during a period. Which of the following accounts would appear on an income statement? (Check all that apply.

Rent Expense a Service Revenue a Rent Revenue wage expense

Melton Door pays rent on the business facilities of 5,000 on may 1. Show how to record this transaction

Rent expense will be increased

balance sheet

Reports the balance of assets, liabilities and owner's equity at a point in time

income statement

Reports the revenues and expenses incurred by a I business for a period of time

Select the statement that best defines "return" when used in business and accounting.

Return is the income received from an investment.

Select the statement below which is true regarding risk as it pertains to business and accounting

Risk is the uncertainty about the return we will earn.

Which organization has the authority to create Generally Accepted Accounting Principles?

SEC

The heading of every financial statement contains several line items. Identify the correct items from the list below. (

The company name. title of the statement date or time period the financial statement covers

shareholder or owner

The person(s) who own(s) a business

income statement

The statement describes a business's revenues and expenses over a period of time.

investing activies

These activities are the acquiring and disposing of assets investing activities that an organization uses in its business.

operating activities

These activities are the every day activities that occur in Operating activities running a business, selling a product or providing a service.

financing activities

These activities provide the monies needed to pay for resources such as land and buildings.

What are Generally Accepted Accounting Principles?

They are the concepts and rules that govern financial accounting practice.

Match the statements on the left with whether they apply to private accounting, public accounting or both.

This area of accounting includes offering tax advice services and auditing service- Public accounting - Accounting specialists in this area of accounting are highly- Both public and private accounting ~ This area of accounting is where employees work for -private accounting

Identify some of the reasons why Congress passed the Sarbanes-Oxley Act. (Check all that apply.)

To help curb financial abuses at companies that issue their stock to the public To require public companies to apply both accounting oversight and stringent internal controls To improve the transparency, accountability and truthfulness in reporting transactions

An owner withdraws $60 cash for personal use. You would record this transaction in the accounting equation by decreasing the (cash/ accounts payable/ accounts receivable)cash account and (increasing/decreasing)increasing the Withdrawals account.

cash increasing

owner investments

cash or other assets an owner puts into the business

Choose one that only contains assets

cash, building, supplies, accounts receivable

Revenues

cause equity to increase and are the assets earned from a company's earning activities

effect of withdrawals on owners equity

cause owners equity to decrease

effect of expenses on owners equity

causes equity to decrease

Withdrawals

decrease equity and are the assets removed for personal use

Owner withdrawal cause an____ in owners equity and are recorded directly in ___

decrease, withdrawals

pressure factor

employee to comitt fraud because of unpaid bills

Using the accounting equation, the purchase of equipment for cash would include an increase in ___ and a decrease in ___

equipment, cash

Describe the order in which a company prepares financial statements.

income statement statement of owners equity balance sheet statement of cash flows

Jack Pickle decided to start a small business. His initial investment was $4,000. Demonstrate how to record this transaction in the accounting equation.

increase Cash by $4,000; Increase J. Pickle, Capital by $4,000

investments

increase equity and are assets an owner puts into the business

a customer makes a partial payment of $100 on a service for which you have already billed him, you would record this transaction into the accounting equation by

increasing Cash and decreasing Accounts Receivable

Jackson's Catering provided $3000 worth of cookies to the local college. The college paid immediately. Record this transaction for Jackson's Catering in the accounting equation by:

increasing cash, increasing revenues

Users of accounting information can be divided into two main groups. These groups include:

internal and external

The statement of owner's equity explains changes in equity from net income (or loss) and from any owner and over a period of time. (

investments, withdrawals

assets=

liabilities+owners capital-owners withdrawals+revenues-expenses

the accounts payable account is a

liability

a creditor

loans money or other resources to a business

The area of accounting that serves the needs of internal users is referred to as

managerial accounting.

internal users of accounting information from the choices below.

officers, managers

correct regarding owner investments

owner investments cause owners equity to increase

other names for equity in a sole proprietorship include

owners equity and owners capitalf

Which of the following external users rely on a business's financial accounting information?

regulators

Higher risk implies higher, but riskier, expected

returns

net income

revenue-expenses

correct regarding revenues

revenues cause equity to increase

paying the salary of two employees. effect of transaction

salary expenses increases owners equity decreases

The heading of every financial statement contains several line items. Identify the correct items from the list below. (Check all that apply.)

the company name title of statement the date or period the financial statement covers

The date line of a balance sheet depicts a specific day and not a period of time.

true

statement of owners equity

~ Reports the changes in equity during a period of time