review

Question 1

What is the net income from the income statment used to compute?

Answer 1

ending retained earnings on the statement of retained earnings

Question 2

what is shown on the balance sheet

Answer 2

ending common stock, retained earnings, and total equity from the statement of stockholder’s equity

Question 3

where is the ending cash balance on the statement of cash flows shown?

Answer 3

balance sheet

Question 4

what is an internal user

Answer 4

people that are in the building

Question 5

what is an external user

Answer 5

everyone that is outside the building

Question 6

users are classified based on whether they are…

Answer 6

internal or external to the entity being reported on

Question 7

accounting definition

Answer 7

the process of measuring economic activity of an entity in monetary terms and communicating the results to users through identifying, quantifying, and recording

Question 8

Ferrell Company had $13,230 of accounts payable on September 1 and $11,760 on September 30. During September, the company paid total cash of $10,275 on accounts payable. Determine the total purchases on account during September

Answer 8

$8,805

Question 9

Parts of an accounting transaction

Answer 9

1.economic event that must be recorded
2. an event that affects any of the elements of the accounting equation (assets, liabilities, or stockholders’ equity)
3. the accounting equation must stay in balance, therefore 2 elements are always affected
4. double-entry accounting

Question 10

calendar vs fiscal year

Answer 10

fiscal- made up start then 12 months
calendar= jan 1- dec 31

Question 11

Transaction: issued common stock for cash

Answer 11

increase cash, increase common stock

Question 12

Transaction: borrowed money from a bank

Answer 12

increase cash, increase note payable

Question 13

Transaction: provided services on account

Answer 13

increase accounts receivable, increase revenue

Question 14

transaction: purchased inventory on account

Answer 14

increase inventory, increase accounts payable

Question 15

Transaction: collected cash from customers that owed a balance due

Answer 15

increase cash, decrease accounts receivable

Question 16

what is accrual accounting

Answer 16

reports accounting transactions irrespective of whether the cash has been received or paid.

Question 17

when is revenue recognized

Answer 17

when the service is given

Question 18

when is expense recognized (matching)

Answer 18

have to account for how much you owe employees even if they don’t get paid yet

Question 19

when is income accounted for

Answer 19

at the time you earn it, not when you get paid

Question 20

order of financial statement preparation

Answer 20

1. income statement
2. statement of stockholders’ equity
3. balance sheet
4. statement of cash flows

Question 21

what is a permanent account and which accounts fall under that

Answer 21

accounts whose balances carry over from one accounting period to the next (reported in the balance sheet)
assets
liabilities
common stock
retained earnings

Question 22

what is a temporary account and which ones are they?

Answer 22

used to father information for a particular accounting period and then reset to zero by transferring the balance to a permanent account (on income statement)
revenue
expenses
dividends

Question 23

Bakos Company reported the following statement of cash flows
Cash flows from operating activities…74,560
Cash flows from investing activities…(32,350)
Cash flows from financing activities…?
Cash balance at the beginning of the year…11,850
Cash balance at the end of the year…70,010
What is the amount of Cash Flows from Financing activities?

Answer 23

$15,950

Question 24

Mia’s Landscaping Company has compiled the following list of account balances of various assets, liabilities, revenues, and expenses on December 31, the end of its first year operations
common stock 12,600
accounts payable 3,500
salary expense 4,200
repairs expense 900
dividends 5,000
truck 8,500
equipment 6,300
notes payable 10,200
cash 17,600
supplies expense 1,300
service revenue 24,800
gasoline expense 900

what is the net income and what are the total liabilities as of December 31?

Answer 24

net income 17,500
liabilities 13,700

Question 25

The "account system"

Answer 25

basic component = the account. the account is an individual record of the increases and decreases in a specific asset, liability, or stockholders' equity item

Question 26

an accrual of wages expense would produce what effect on the balance sheet?

Answer 26

increase liability, decrease stockholders' equity (retained earnings)

Question 27

Simon orders 85$ worth of Pizza from the Pizza shop on January 17th. He pays online and asks to pick up the pizzas on February 1st. When is the 85$ in revenue recognized?

Answer 27

February 1st

Question 28

Simon orders 2 pizzas in store, pays for them, and then takes them home. he pays 85$. when is the revenue recognized? what is shown on the balance sheet and income statement?

Answer 28

that day balance sheet- +85$ assets, +85$ retained earnings income statement- +85$ revenues, +85$ net income

Question 29

the pizza shop prepaid one year of its rent (6000$) on december 1. what does the adjustment on the transactions look like for decemeber in terms of deffered expenses

Answer 29

balance sheet: -500$ assets, -500$ SE (retained earnings) income statement: +500$ expenses, -500$ net income

Question 30

what is the holy grail of accounting

Answer 30

assets= liabilities + stockholders' equity

Question 31

managerial accounting information

Answer 31

for internal users only, used for internal decision making (pricing products and budgets), typically proprietary in nature

Question 32

identify assets and liabilities

Answer 32

assets- cash, accounts receivable, supplies, prepaid rent liabilities- accounts payable, interest payable, notes payable

Question 33

Securities and exchange commission (SEC)

Answer 33

regulate the sale of stocks and bonds

Question 34

financial accounting standards board (FASB)

Answer 34

nongovernmental entity in charge of creating the US GAAP. they are the only people who can modify it

Question 35

Public Company Accounting Oversight Board (PCAOB)

Answer 35

oversees auditing

Question 36

what is the time frames each financial statement represents?

Answer 36

The time frames that each financial statement represents Balance sheet- specific date Income statement -year Statement of stockholders equity- year Statements of cash flows -year

Question 37

financial accounting...who's it for?

Answer 37

for external users like creditors, investors, and stockholders