ACTG 211 - Chapter 1 Connect

Why does a business need accounting information?

Accounting records business transactions and communicates financial information.

When recording transactions into the accounting equation, which of the following statements are correct? (Check all that apply.)

After recording the transaction, total assets will always equal total liabilities plus equity. The accounting equation must always remain in balance.

Identify the expanded accounting equation from the options below.

Assets = Liabilities + Common Stock - Dividends + Revenues - Expenses

Which list of accounts below, identifies only accounts that would appear on a balance sheet.

Common Stock, Equipment, Accounts Payable

Smith Company purchased $100 of supplies for her business and paid immediately. She would record this transaction in the accounting equation by which of the following?

Decrease Cash; increase Supplies.

From the following statements, select the one that describes the effect of dividends on equity.

Dividends cause equity to decrease.

Given the list of accounts below, identify which of them would appear on a balance sheet.

Equipment Accounts Payable Cash Supplies Retained earnings

Jack Pickle decided to start a small business as a corporation. His initial investment was $4,000 cash in exchange for common stock. Demonstrate how to record this transaction in the accounting equation.

Increase Cash by $4,000; Increase Common Stock by $4,000.

Which statement below defines why accounting information is useful?

It identifies, records, and communicates business transactions.

All of the following are part of the FASB conceptual framework: (Select all that apply).

Recognition and measurement Elements Objectives Qualitative characteristics

Which of the statement(s) below define(s) an asset? (Check all that apply.)

Resources controlled by the business An amount owned Resources with expected future benefits

Identify which of the following lists of accounts would belong on the statement of retained earnings.

Retained earnings and Dividends

Identify the correct definition of an asset:

Something of value that a business owns or controls

Which of the following statements below lists the rules of entering transactions into the accounting equation?

The accounting equation must always remain in balance so that assets always equal the sum of liabilities and equity.

What are Generally Accepted Accounting Principles?

The concepts and rules that govern financial accounting practice.

Which of the following statements explain how the accounting equation applies to businesses? Check all that apply.

The relation of assets, liabilities and equity is reflected in the equation. The equation applies to all transactions. The equation states that Assets = Liabilities + Equity. The equation reflects that the total of what a business owns at any point in time will equal the total of what it owes creditors and owners.

The correct definition of an income statement includes which of the following?

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

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

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

Which of the following statements best represents the accounting equation?

The total of everything owned by a business must always equal the total of what the business owes to creditors and owners.

True or false: Artificial intelligence includes repetitive tasks such as recording basic transactions.

True

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?

Wages Expense Service Revenue Rent Revenue Rent Expense

Identify which of the following statements is correct as to why accounting is important.

We live in an information age whereby accounting information impacts everyone.

When supplies are purchased on credit it means that: (Check all that apply.)

a liability has been incurred. the Accounts Payable account will be increased. the business will pay for the supplies at a later time.

Dividends cause a(n) _________ (increase/decrease) in equity and are recorded directly in the ________ (retained earnings/dividends/equity) account.

decrease dividends

The statement of retained earnings explains changes in equity from net income (or loss) and from any ______ over a period of time.

dividends

When using the accounting equation, recording the purchase of equipment for cash would include an increase to the ________ (Cash/Equipment/Supplies) account and a decrease to the ___________ (Cash/Equipment/Supplies) account.

equipment cash

Users who do not directly run the organization and have limited access to accounting information are known as __________(internal/external) users.

external

Generally accepted accounting principles (GAAP) wants information to have: (Check all that apply)

faithful representation relevance

Sally Smith decided to start a sea shell business organized as a corporation. Her initial investment in the business consisted of $10,000 in cash in exchange for common stock. Record this transaction in the accounting equation of the new business by:

increasing Cash; increasing Common Stock

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

internal and external

Buying and selling of long-term assets such as land and equipment would be included in the __________ (operating/investing/financing) activities section of the Statement of Cash Flows.

investing

The three sections of the statement of cash flows includes all of the following:

investing financing operating

The Accounts Payable account is a(n) ______ account.

liability

The FASB conceptual framework consists of all of the following except: objectives elements recognition and measurement qualitative characteristics quantitative

quantitative

Artificial intelligence includes:

repetitive tasks

To record the purchase of supplies for cash, the correct entry into the accounting equation would include an increase to __________ (Equipment/Supplies/Cash) and a decrease to _________ (Equipment/Supplies/Cash)

supplies cash