Week 2 Balance Sheet

Question 1

four primary financial statements used for financial accounting

Answer 1

-Income Statement (or Profits & Losses)
-Statement of Retained Earnings (or Owners’ Equity)
-Balance Sheet (or Financial Position)
-Statement of Cash Flows

Question 2

a formal financial statement illustrating the assets, liabilities and owners equity of a business as of a specific date

Answer 2

balance sheet

Question 3

record of the balance sheet data for two or more comparable periods (years) so that the information can be easily compared

Answer 3

comparative balance sheet

Question 4

a device for recording the changes (increases & decreases) in the fundamental accounting elements

Answer 4

account

Question 5

the balance sheet shows ____

Answer 5

Assets = Liabilities + Owner’s Equity
(accounting equation)

Question 6

assets are classified by ____

Answer 6

liquidity (how easily they can be converted to cash)

Question 7

cash or other assets that will be converted into cash or consumed within one year (the normal business cycle)

Answer 7

current assets

Question 8

property of a relatively permeant nature used in the operation of a business and not intended for resale

Answer 8

fixed (non-current) assets

Question 9

coins, currency (paper money), checks, credit card receipts and money orders received from others as well as money deposits in the bank

Answer 9

cash

Question 10

a fund of currency and coin established for
the payment of small amounts of money

Answer 10

petty cash fund

Question 11

an unwritten promise by a customer to pay, at a later date, for goods sold or services rendered

Answer 11

accounts receivable (A/R)

Question 12

items which are considered assets when acquired, but which will become expenses when consumed or expired

Answer 12

prepaid expenses

Question 13

a type of asset that will be consumed as it is used

Answer 13

supplies

Question 14

goods purchased for resale at a profit

Answer 14

inventory (merchandise)

Question 15

assets that can be appraised by value
or seen or touched

Answer 15

tangible assets

Question 16

assets that cannot be touched or grasped

Answer 16

intangible assets

Question 17

debts of a business that are generally paid within one year (the normal business cycle)

Answer 17

current liabilities

Question 18

debts of a business that are not due or payable within one year

Answer 18

long term liabilities

Question 19

an unwritten promise to pay creditors for property, such as merchandise, supplies, equipment purchased on credit or for services received on credit

Answer 19

accounts payable

Question 20

a liability representing revenues received in advance

Answer 20

unearned revenue

Question 21

a written promise that pledges real property as security for payment of debt

Answer 21

mortgage payable

Question 22

a written promise to pay a creditor a certain amount in the future

Answer 22

notes payable

Question 23

a long term debt instrument that promises to pay interest periodically and a principal amount at maturity

Answer 23

bonds payable

Question 24

the amount of value that owner’s have
directly invested into the corporation

Answer 24

capital stock

Question 25

____ stock and ____ stock are the two kinds of stocks that make up capital stock

Answer 25

common & preferred

Question 26

the earnings of a corporation that have been retained in the corporation (have not been paid out as a dividend) for future corporation use

Answer 26

retained earnings