Chapter 5 Test 1

Question 1

Retained Earnings (Ending Balance) =

Answer 1

Retained Earnings (Begining Bal.) + Net Income - Dividends

Question 2

Net Income - Dividends =

Answer 2

Retained Earnings (Endings Bal) - Retained Earnings (Begining Bal)

Question 3

Change in Retained Earnings =

Answer 3

Net Income - Dividend

Question 4

What begins at the top of Income Statements

Answer 4

Revenues

Question 5

Cost of Goods Sold

Answer 5

is the cost of products sold and services provided during the period

Question 6

Gross Margin/Profit Margin

Answer 6

(Sales - Cost Sales)

Question 7

Operating Expenses

Answer 7

i.e. Selling, general, and administrative, research and development

Question 8

Operating Profit or Operating Income

Answer 8

(Sales - Total Operating Expenses)

Question 9

Revenue Recognition

Answer 9

refers to the timing and measurement of revenues

Question 10

Revenues and Expenses

Answer 10

Gains and Losses

Question 11

Expense Recognition

Answer 11

when the firm consumes the benfits

Question 12

Expenses

Answer 12

Reduce net income and retained earnings on the balance sheet

Question 13

Conditions for recognizing an expense

Answer 13

1. The consumption of the asset results from a transaction that leads to the recognition of revenue
2. The consumption of the asset results from the passage fo time.

Question 14

Comprehensive Income =

Answer 14

Net Income + Other Comprehensive Income

Question 15

Accumulated Other Comprehensive Income (Beg) + Other Comprehensive Income =

Answer 15

Accumulated Other Comprehensive Income (Ending)