Practice questions Accounting
What is the Statement of cash flow?
( a change statement) reconciles the Cash account ( beginning of period to end of period), showing cash inflows and cash outflows in three categories. What are these three categories? 1) Operating Activities 2) Investing Activities 3) Financing Activities
What is an example of a POSITION statement?
1) Balance sheet
What is one example of an internal stakeholder?
1) Business managers and employees - They want the business to succeed so that they can have money
What are the three types of External stakeholders?
1) Capital market stakeholder 2) Product/Service market stakeholder 3) Government stakeholder
Financial accounting gives information to EXTERNAL stakeholders about what?
1) Changes in financial condition during a period...what are the three financial statements? Income statement, statement of retained earnings, statement of cash flows 2) Changes in financial condition at a single point in time ( One financial statement): Balance sheet
Accounting is the language of business. The purpose of accounting is to provide information to both external and internal stakeholders so that they can...
1) Evaluate a company's current health 2) Evaluate a company's future prospects
What are two examples of FLOW statements?
1) Income Statement 2) Statement of Retained Earnings These are given monthly
What are two examples of Capital market stakeholders?
1) Lenders/Creditors 2) Owners/Stockholders
What are two examples of product/service Market stakeholders?
1) Suppliers 2) Costumers
Managerial Accounting gives forward-focused information to INTERNAL stakeholders so they can make decisions about the future. What are two of these ways?
1. Projected financial statements 2. Daily progress reports
Accounts summarize the effects of business transactions. What are 6 account categories?
A.L.E.R.E.D Assets, liability, equity, REVENUES, expenses, and dividends
Accounts receivable
Asset, Balance Sheet
Cash
Asset, Balance Sheet
Inventories
Asset, Balance Sheet
Property, Plant, and Equipment
Asset, Balance Sheet
What is the accounting equation?
Assets=Liability+ Equity ALE!! - This shows where a business stands
What is an example of an asset?
Cash, Land, Buildings...
What does the equal sign mean in the accounting equation?
Comes From!
Capital Stock
Equity, Balance Sheet
Cost of Sales
Expense, Income Statement
Income Tax expense
Expense, Income Statement
Interest Expense
Expense, Income Statement (Know EXPENSE indicates the Income Statement)
Selling and administrative expenses
Expenses, Income Statement
When does one make a balance sheet?
Last day of each accounting period (First day of the next accounting period)
Accounts Payable
Liability, Balance Sheet
Note Payable (Due in 10 years)
Liability, Balance Sheet
Income Tax Payable
Liability, Balance Sheet (When it says "Payable" know that means Balance Sheet)
What is the final result of integrated financial statements?
Net income from the income statement increases retained earnings on the Statement of Retained Earnings, which increases equity on the Balance Sheet
Dividends
Retained Earnings
Retained Earnings
Retained Earnings, this is the beginning of the Retained Earnings Statement and the equity on the balance sheet
Sales
Revenue, Income Statement
What is the difference between a stakeholder and a stockholder?
Stakeholder: Anyone that is interested or is affected by the corporation. Employees, the employees' families, suppliers, customers, community, and others Stockholder: A shareholder or an owner of stock in a corporation
Cash Payments for Operating Activities
Statement of Cash Flow
Cash Receipts for Operating Activities
Statement of Cash Flow
What is the purpose of the statement of Retained Earnings?
To see how much profit was kept!!
