Financial Accounting Exam 1 - Chapter 1 & 2
Equation for SE
RE + CS
Equation for RE
Revenue - Expenses - Dividends
Revenue, Expenses and Dividends relationship with Stockholder's Equity
Revenue: Increase in Revenue= Increase in SE Expenses and Dividends: Decrease in either= Decrease in SE
What does "on account" mean?
Either Accounts Receivable or Accounts payable
Relationship between SE and Balance Sheet
Ending Retained Earnings from the Balance Sheet is transferred from SE to the Balance Sheet and is used under the Stockholder's Equity
Generally Accepted Accounting Principles (GAAP)
common set of accounting principles, standards and procedures that companies must follow when they compile their financial statements - Issued by FASB
Unadjusted Trial Balance
list of all accounts and their aggregated totals at a particular date; uses account balances
Two functions of accounting are
measuring and communicating
Financial Accounting Standards Board (FASB)
private, non-profit organization market regulator whose primary purpose is to establish and improve generally accepted accounting principles (GAAP) within the United States
Name the Financial Statement, Normal Balance, and Category of the following 1. Common Stock 2. Prepaid Expenses 3. Accounts Payable 4. Notes Payable 5. Cash 6. Retained Earnings 7. Unearned Revenue 8. Accounts Receivable 9. Accumulated Depreciation
1. Balance Sheet, Credit, Stockholder's Equity 2. Balance Sheet, Debit, Asset 3. Balance Sheet, Credit, Liability 4. Balance Sheet, Credit, Liability 5. Balance Sheet, Debit, Asset 6. Balance Sheet, Credit, Stockholders Equity 7. Balance Sheet, Credit, Liability 8. Balance Sheet, Debit, Asset 9. Balance Sheet, Credit, Asset
Define the debit and credit effects on the accounting equation in regards to... 1. Common Stock 2. Retained Earnings 3. Revenue 4. Expenses 5. Dividends 6. Stockholders Equity 7. Assets 8. Liabilities
1. Decrease with debit, Increase with credit 2. Decrease with debit, Increase with credit 3. Decrease with debit, Increase with credit 4. Increase with debit, decrease with credit 5. Increase with debit, decrease with credit 6. Decrease with debit, Increase with credit 7. Increase with debit, decrease with credit 8. Decrease with debit, increase with credit
Name the Financial Statement and Normal Balance of the following 1. Depreciation Expense 2. Expenses 3. Revenue 4. Liability 5. Dividends
1. Income statement, Debit 2. Income statement, Debit 3. Income Statement, Credit 4. Balance Sheet, Credit 5. Stockholder's Equity, Debit
How to record a Journal entry
1. Record debit along with $ value 2. Record credits with indent and $ value 3. Provide a description of the transaction
What is included in the right side of a T-account?
Credits: - Stockholder's equity, revenue, liabilities
3 aspects of Cash Flow
Operating Financing Investing
Cash Flow- Investing
Cash transactions for the purchase of long-term assets and investments; assets that provide benefits for longer than 1 year ex: equipment, land, plant assets
What is included on the left side of a T-account?
Debits: - Dividends, Expenses, Assets
Cash Flow- Financing
Includes transactions the company has with investors and creditors ex: issuing stock, borrowing money from bank (notes payable)
Cash Flow- Operating
Involves transactions that relate to the primary operations of the company; providing products and services to customers ex: rent, salaries, utilities, taxes, advertising
Relationship between Income Statement and Statement of Stockholder's Equity?
Net Income from the Income Statement in transferred to SE and is used to calculate Retained Earnings - (Beg balance + Net Income - Dividends)
Relationship between Balance Sheet and Statement of Cash Flow
The statement of cash flows reconciles changes in the cash account from the beginning to the ending balance sheet