Ch1

Question 1

Assets

Answer 1

Things that a business possesses

Ex.Accou ts recieveable, cash, supplies, prepaid insurance, equipment

Question 2

Liabilities

Answer 2

Debts of a business

Ex. Accounts payable, salaries payable, notes payable, taxes payable, unearned revenue

Question 3

Owners equity

Answer 3

Ownership of a business

Ex. Common stock, retained earnings, and dividends

Question 4

Revenue

Answer 4

What a business earns when it sells goods and services

Ex. Tuition revenue, ticket sales, interest income, fees earned

Question 5

Expense

Answer 5

What a business spends when it is trying to sell goods and services
Ex.Salaries expense, rent expense, utilities expense, depreciation expense

Question 6

Accounting equation

Answer 6

Assets=liabilities + Equity

Question 7

Expanded accounting equation

Answer 7

Assets= Liabilities+ common stock-dividends+revenues-expenses

Question 8

Income statement

Answer 8

Financial statement that subtracts expenses from revenues to yield a net income or loss over a specified. Period of time; also includes any gains or losses
Revenues-Expenses=Net income

Question 9

Statement of retained earnings

Answer 9

Report of changes in retained earnings over a period; adjusted for increases (net income) for decreases (dividends and net loss), and for any prior period adjustment
Beginning retained earnings+net income-dividends=End. Retained earnings

Question 10

Balance sheet

Answer 10

Describes a company’s financial position (types and amounts of assets, liabilities, and equity) at a point in time
Assets=Liabilities+Equity

Question 11

Statement of Cash Flows

Answer 11

Identifies cash inflows (receipts) and cash outflows (payments) over a period of time
+/-Operating C.F. +/-Investing C.F. +/-Fincancing C.F.= Change in Cash