Chapter 1 Hw Flashcards
1
Q
Service revenue
A
income statement
2
Q
Equipment
A
balance sheet
3
Q
Advertising expense
A
income statement
4
Q
Accounts receivable
A
balance sheet
5
Q
Common stock
A
balance sheet
6
Q
Interest payable
A
balance sheet
7
Q
Cost of renting property: .
A
Expense
8
Q
Truck purchased: .
A
Asset
9
Q
Notes payable: .
A
Liabilities
10
Q
Issuance of ownership shares:
A
Common stock.
11
Q
Amount earned from performing service:
A
Revenue
12
Q
Amounts owed to suppliers:
A
Liabilities
13
Q
The statement of cash flows would disclose the payment of a dividend
A
in the financing activities section.
14
Q
what things are stockholders’ equity
A
common stock and retained earnings
15
Q
How to calculate retained earnings statement?
A
net income - dividend
16
Q
List assets in order of liquidity
A
cash -> accounts receivable -> supplies -> equipment
17
Q
The basic accounting equation is
A
assets = liabilities + stockholders’ equity
18
Q
[Liability or Not Liability] cash
A
Not Liability
19
Q
[Liability or Not Liability] Accounts payable
A
Liability
20
Q
[Liability or Not Liability] Dividends
A
Not Liability
21
Q
[Liability or Not Liability] Accounts receivable
A
Not Liability
22
Q
[Liability or Not Liability] Supplies
A
Not Liability
23
Q
[Liability or Not Liability] Equipment
A
Not Liability
24
Q
[Liability or Not Liability] Salaries and wages payable
A
Liability
25
[Liability or Not Liability] Service revenue
Not Liability
26
[Liability or Not Liability] Rent expense
Not Liability
27
[Affects and Account Title] Costs incurred for advertising.
Affects: Expense
| Account Title: Advertising expense
28
[Affects and Account Title] Cash received for services performed.
Affects: revenue
| Account Title: service revenue
29
[Affects and Account Title] Costs incurred for insurance.
Affects: expense
| Account Title: insurance expense
30
[Affects and Account Title] Amounts paid to employees.
Affects: expense
| Account Title: salaries and wages expense
31
[Affects and Account Title] Cash distributed to stockholders.
Affects: dividends
| Account Title: not applicable
32
[Affects and Account Title] Cash received in exchange for allowing the use of the company’s building.
Affects: revenue
| Account Title: rent revenue
33
[Affects and Account Title] Costs incurred for utilities used.
Affects: expense
| Account Title: utilities expense
34
[Affects and Account Title] Cash purchase of equipment.
Affects: does not affect stockholders' equity
| Account Title: not applicable
35
[Affects and Account Title] Cash received from investors.
Affects: common stock
| Account Title: not applicable
36
Income Statement
Reports success or failure of the company's operations during the period of the statement.
Summarizes all revenue and expenses for period (month, quarter, or year).
If revenues exceed expenses, the result is a net income. If expenses exceed revenue, the result is a net loss.
37
Retained Earnings Statement
Change in ownership based on fiscal period information.
Indicates amount paid out in dividends and amount of net income or net loss for period.
Shows changes in retained earnings balance during period covered by statement.
Time period is the same as that covered by income statement.
38
Assets
Assets — resources owned by the business which are expected to provide a value or service to the business at some future point in time.
39
Liabilities
Liabilities — creditors claims (obligations or debts of the business) on total assets for resources or services provided to the business in the past.
40
Stockholders' Equity
Stockholders' Equity — ownership claim on total assets.
41
Balance Sheet
Balance Sheet
Shows relationship between assets, liabilities, and stockholders' equity at a particular date.
In equation form
Assets = Liabilities + Stockholders’ Equity
Referred to as the basic accounting equation
42
Assets = Liabilities + Stockholders Equity is referred to what?
basic accounting equation
43
Statement of Cash Flows
Reports cash inflows and outflows resulting from financing, investing, and operating activities during the period.
Reports the cash effects of a company's operations for a period of time.
Shows cash increases and decreases from investing and financing activities.
Indicates increase or decrease in cash balance as well as ending cash balance.
44
INTERRELATIONSHIPS OF STATEMENTS
Net income from the income statement is added to beginning retained earnings to determine ending retained earnings.
Ending retained earnings (reported on the retained earnings statement) is also reported on the balance sheet.
The ending amount of cash shown on the statement of cash flows must agree with the amount of cash on the balance sheet.
45
income statement
revenues - expenses = net income or net loss
46
retained earning statement
retained earnings, beginning add net income - dividends = retained earnings, ending
47
balance sheet
```
assets
cash
liabilities
stockholders equity
common stock
retained earning
```
48
statement of cash flows
cash flows
net increase in cash
cash at the beginning of period
cash at end of period
49
Management Discussion and Analysis or annual reports
Covers various financial aspects of a company
Ability to pay near-term obligations
Ability to fund operations and expansion
Result of operations
50
Notes to Financial Statements
Clarify information presented in the financial statements.
| Describe accounting policies or explain uncertainties and contingencies.
51
Auditor's Report
- Auditor, a CPA, a professional accountant, who conducts an independent examination of the financial accounting data presented by a company.
- Auditor gives an "unqualified" opinion, meaning the auditor has no reservations concerning the material validity of the presented information, if the financial statements present the financial position, results of operations, and cash flows in accordance with accepted accounting standards.
52
income statement
Revenue during the period.
53
balance sheet
Supplies on hand at the end of the year.
54
statement of cash flows
Cash received from issuing new bonds during the period.
55
balance sheet
Total debts outstanding at the end of the period.
56
Auditor's opinion
An expression about whether financial statements conform with generally accepted accounting principles.
57
Corporation
A business that raises money by issuing shares of stock.
58
Common stock
The portion of stockholders’ equity that results from receiving cash from investors.
59
Accounts payable
Obligations to suppliers of goods.
60
Account receivable
Amounts due from customers.
61
Creditor
A party to whom a business owes money.
62
Stockholder
A party that invests in common stock.
63
Partnership
A business that is owned jointly by two or more individuals but does not issue stock.
