Statement Terms

Question 1

Communicates information about a business’s financial performance by summarizing revenues less expenses over a period of time

Answer 1

Income Statement

Question 2

When revenues are greater than expenses, the difference is called

Answer 2

net income or profit

Question 3

When expenses are greater than revenue

Answer 3

net loss

Question 4

provides information about how the balances in Share capital and Retained earnings changed during the period

Answer 4

statement of changes in equity

Question 5

represents how much shareholders have invested

Answer 5

share capital

Question 6

the sum of all net incomes earned by a corporation over its life

Answer 6

Retained earnings

Question 7

Distributions of net income to shareholders

Answer 7

dividends

Question 8

shows a business’s assets, liabilities, and

equity at a point in time

Answer 8

balance sheet

Question 9

economic resources that provide future benefits to the business

Answer 9

Assets

Question 10

represent amounts to be collected in cash in the future for

goods sold or services provided to customers on credit

Answer 10

Accounts receivable

Question 11

assets that are paid in cash in advance and have benefits that apply over future periods

Answer 11

Prepaid expenses

Question 12

an obligation to pay an asset in the future

Answer 12

liability

Question 13

obligations to pay a creditor for goods purchased or services rendered

Answer 13

Accounts payable

Question 14

represents an advance payment of cash from

a customer for services or products to be provided in the future

Answer 14

Unearned revenue

Question 15

represents the net assets owned by the owners

Answer 15

equity

Question 16

Assets can be financed through liabilities, also known

Answer 16

debt

Question 17

explains how the balance in cash changed over a period of time by detailing the sources (inflows) and uses (outflows) of cash by type of activity: operating, investing, and financing

Answer 17

statement of cash flows

Question 18

the day-to-day processes involved in selling products and/or services to generate net income

Answer 18

Operating activities

Question 19

the buying of assets needed to generate revenues

Answer 19

Investing activities

Question 20

the raising of money needed to invest in asset

Answer 20

Financing activities

Question 21

also referred to as the books

Answer 21

ledger

Question 22

are a promise to pay an amount on a specific future date plus a predetermined amount of interest

Answer 22

notes payable

Question 23

are supplies to be used in the future

Answer 23

Office supplies

Question 24

items to be sold in the future

Answer 24

Merchandise inventory

Question 25

represents an amount paid in advance for insurance

Answer 25

prepaid insurance

Question 26

represents an amount paid in advance for rent

Answer 26

prepaid rent

Question 27

wages owed to employees for work performed

Answer 27

Wages payable

Question 28

are a debt owed to a bank or other creditor that is normally paid within one year

Answer 28

Short-term notes payable

Question 29

are a debt owed to a bank or other creditor that is normally paid beyond one year

Answer 29

Long-term notes payable

Question 30

are payments received in advance of the product or service being provided. In other words, the business owes a customer the product/service

Answer 30

Unearned revenues