accounting exam 1
stock
a ______ certificate is a legal document representing ownership in a corporation
accounts recievable
accounts _______ is an asset on the balance sheet that reports the amounts owed by customers for sales or services provided on credit
revenues
amounts earned by selling goods and services
expenses
amounts used to generate profits
payable; liability
an amount owed to a supplier for prior purchases on account is an account ______ which is a _______ account
balance sheet and statement of cash flows
cash is reported on which of the following financial statements?
4
companies typically prepare _____ financial statements each accounting period.
liabilities
creditors' claims to economic resources
-stockholders' equity -retained earnings
dividends decrease_________
assets
economic resources that will provide future benefit
-includes the name of the company -indicates if the reported numbers are rounded to the nearest thousand or million -includes the time period covered
heading of an income statement _____.
-obtain financing -purchase assets
identify key activities necessary to start a business
corporations
income is taxed twice
income statement
reports the financial performance of the business during the current accounting period
balance sheet
reports the financial position of the business at a point in time
statement of cash flows
reports the operating, investing, and financing activities effect on cash
revenues
revenues_______ are earned by selling goods or services to customers and is the first line item reported on the income statement
1) sales revenue 2) salaries and wages expense 3) utilities expense 4) advertising expense 5) net income
single-step income statement
1) revenue 2) expenses 3) net income
single-step income statement items in the proper order from top to bottom
cash paid for supplies
statement of cash flows
balance sheet
supplies
income statement
supplies expense
Decrease in Liabilities
the effect on the accounting equation of paying suppliers for amounts owed includes a ________
-statement of retained earnings -balance sheet
the ending retained earnings balance appears on the ______
cash; common stock
the issuance of common stock is recorded with a debit to ________ and a credit to __________
make a profit
the primary goal of most companies is to ______.
-sole proprietorship -corporation -partnership
three common forms of business organizations include______.
-creditors -stockholders
two sources of financing for a new business are _______
financing and investing activities
typical steps needed before a business can start selling goods/ services to customers include_______
accounts are_____
used to accumulate and report the effects of each different business activity
liability; notes payable
when a company borrows from a bank by signing a formal agreement, an asset titled cash is increased and a ________ titled __________ is increased.
payable
when a company pays its supplier for amounts owed, its cash and accounts ________ are decreased
investing, operating, and financing
3 activities found on the statement of cash flows?
-partnerships have more than one owner -owners are personally responsible for the debts of the partnership, even if the debts are more than the amount owners have invested in the business
Key characteristics of a partnership?
retained earnings
Retained __________ represents the capital earned by the company
Sole Proprietorship
The owner is personally responsible for the debts of the business even if the debts are more than the owner has invested in the business
accounts
individual expenses are accumulated in separate _______.
partnerships
legal liability is the responsibility of two or more owners
on both the income statement and statement of retained earnings
net income is reported_____
partnerships and sole proprietorships
owners have unlimited liability
stockholders' equity
owners' claims to economic resources
retained earnings
profits earned by a company that have not been paid to stockholders at the end of an accounting period are called ________.
statement of retained earnings
reports the accumulation of profits kept by the business during the current accounting period with that of prior periods