Chapter 1

Question 1

Income Statement

Answer 1

R-E=N; Revenue - Expenses = Net Income; specific month or year;
When revenues exceed expenses, it is referred to as net income, net profit, or earnings. When expenses exceed revenues, it is referred to as net loss.

Question 2

Balance Sheet

Answer 2

“ALE” ; Assets=Liabilities+Equity; a specific date

Question 3

Cash Flow Statement

Answer 3

OIF; Operating, Investing, Financing; specific month or year

Question 4

Statement of Stockholders’ Equity

Answer 4

a summary of changes in stockholders’ equity during a specific month or year; chat gpt ;the statement of stockholders’ equity is viewed as the connecting link between the income statement and the balance sheet.says its found in balance sheet. includes common stock and earnings, dividends

Question 5

Net Income

Answer 5

revenues exceed expenses

Question 6

revenues

Answer 6

amount earned (received) from providing services or selling goods to customers; when the services have been performed or goods are delivered to the customer Also, revenue from providing services is recorded as fees earned. Revenue from the sale of merchandise is recorded as sales. Other examples of revenue include rent, which is recorded as rent revenue, and interest, which is recorded as interest revenue. in addition, Instead of receiving cash at the time services are provided or goods are sold, a business may accept payment at a later date. Such revenues are described as fees earned on account or sales on account

Question 7

Expenses

Answer 7

are amounts used to generate revenue; to be recorded in the same period as the related revenue

Question 8

assets.

Answer 8

The resources owned by a business

Question 9

two types of rights to assets

Answer 9

The rights to the assets are the rights of creditors and rights of owners

Question 10

liabilities

Answer 10

The rights of creditors are the debts of the business

Question 11

equity or stockholders equity

Answer 11

The rights of owners; LLC is owners equity

Question 12

what is the accounting equation

Answer 12

assets= liabilities+ equity

Question 13

what is common stock

Answer 13

corporations issue this to investors as proof of their ownership right

Question 14

what is purchase on account

Answer 14

having the liability to pay in the future for receiving something in return, such as credit card payments

Question 15

What is the liability created by a purchase on account called

Answer 15

account payable

Question 16

supplies that will be used in the future?

Answer 16

prepaid expenses (are assets)

Question 17

what are accounts receivable

Answer 17

In such cases, the firm has an asset, called an account receivable, which is a claim against the customer. The effect of the transaction increases Accounts Receivable and Fees Earned. When customers pay their accounts, Cash increases and Accounts Receivable decreases.

Question 18

what are dividends?

Answer 18

are distributions of earnings to stockholders. The payment of dividends decreases cash and stockholders’ equity. Like expenses, dividends are recorded in a separate column to the right of Common Stock as a negative amount. (Cash increases common stock increases?)

Question 19

Stockholders’ equity is classified as:

Answer 19

Common Stock-shares of ownership distributed to investors of a corporation

Retained Earnings- the total stockholders’ equity created from business operations through revenue and expense transactions.