question

TF: A business organized as a separate legal entity owned by stockholders is a partnership.

answer

FALSE. A Corporation is a separate legal entity owned by stockholders. A partnership is A voluntary association of two or more persons for the purpose of conducting a business.

question

The liability of corporate stockholders is limited to the amount of their investment. TF

answer

TRUE

question

Name the accounting Equation

answer

Assets= Liabilities +Stockholders Equity

question

If the assets owned by a business total 100,000 and liabilities total 70,000 stockholder's equity totals 30,000. TF

answer

True. Assets = 100. Liabilities =70. 100-70.

question

Accounting communicates financial information about a business to both internal and external users.

answer

True

question

Name two external users of accounting information

answer

Investors and Creditors

question

Three Types of Business Activities

answer

Financing Investing Operating

question

The primary purpose of the statement of cash flows is to provide information about the cash receipts and cash payments of a company for a specific period of time.

answer

True

question

The balance sheet reports assets and claims to those assets at a specific point in time,

answer

True

question

A business organized as a corporation is owned by it's ________

answer

Stockholders

question

A big advantage of corporations relative to partnerships and sole proprietorships

answer

the fact there's a reduced legal liability for investors.

question

What is the modern def. of accounting

answer

The information system that indetifies records and communities the economic events of an organization to interested users.

question

3 Steps to the Accounting Process

answer

. Identify the relevant economic activity 2. Quantify these activities 3. Record the results

question

Expenses are incurred to _______

answer

To generate revenues

question

The cost of assets consumed or services used is also know as _______

answer

As an expense

question

Resources owned by a business are referred to as _______

answer

assets

question

Net Income =

answer

Revenues > Expenses

question

Liabilities =

answer

Are debts and obligations.

question

Stockholders equity =

answer

owners on total assets

question

The Balance Sheet indicates

answer

whether the company relies on debt or stockholder's equity to finance its assets.

question

Things that are Assets

answer

Cash Investments Accounts Receivable Prepaid Accounts Equipment/Property

question

Assets on the balance sheet are recorded at historical cost or their exchange value TF

answer

True

question

The accounting period in which service revenue is recognized is generally the period when cash is collected. TF

answer

FALSE

question

The payment of a cash dividend to schokholders reduces stockholders equity TF

answer

True

question

An income statement presents the revenues expenses and net income or net loss of the business for a period of time. TF

answer

TRue

question

When a company ships products to a customer and bills the customer the company should not recognize revenue until the cash is collected. TF

answer

FALSE

question

Accounting measures and reports financial data for profit making businesses as well as not for profit organizations.

answer

TRUE

question

One of the disadvantages of a corporation when compared to a partnership is the limited liability of the owners. TF

answer

FALSE, Although there is protective liability over some of the owners the company, (Stockholders)

question

Revenue has the the effect of increasing what?

answer

Retained Earning

question

TF: For account purposes, business transactions should be kept separate from the personal transactions of the stockholders of the business

answer

True

question

An intangible asset _________

answer

derives its value from the rights and privileges of its owners.

question

Which of the Following is not an asset? Equipment, Dividends, Accounts Recievable, Inventory.

answer

B. Dividends

question

On a classified balance sheet companies usually list current asset in

answer

The order in which they are expected to be converted into cash.

question

Issuing new shares of common stock will______

answer

Increase common stock

question

Declaring a cash dividend will

answer

Decrease retained earnings

question

The primary purpose of the balance sheet is to _____

answer

Report the financial position of the reporting entity at a particular point in time.

question

Things that are Retained Earnings

answer

Beginning Balance, Revenues, To find: Revenues- Expenses. Then Subtract dividends to find Retained Earnings.

question

A paid dividend will do what to assists and stockholders equity?

answer

It will decrease assets and stockholders equity.

question

What has an effect on retained Earnings

answer

Expense Dividends Revenues. Land purchase WILL NOT have any effect.

question

Receipts from customers that are given in advance are not treated as _______

answer

revenue. Revenue cannot be recognized until the work is performed.

question

The normal balance of any account in on what side?

answer

The side which increases the account.

question

The double entry system requires that each transaction must be recorded in _____

answer

in at least two different accounts

question

The retained earnings account is classified on the balance sheet as a liability.

answer

FALSE

question

The separate entity assumption assumes a stable monetary unit

answer

False

question

Liabilities are recorded in their order of maturity meaning when they will paid or satisfied by providing goods or services.

answer

True

question

Transactions have a dual economic effect on the fundamental accounting midel

answer

TRue

question

An account is a standardized format used to accumulate the effects of transactions on each financial state item

answer

True

question

The purchase of a delivery truck for cash increases assets and stockholder's equity

answer

False

question

Normally, asset accounts will have credit balances and liability accounts will have debit accounts

answer

False

question

the cash account is debited shen stock is sold to investors and a stockholders equity is credited.

answer

True

question

When a company borrows money from a bank, it leads to a cash inflow from an investing activity.

answer

False

question

The revenue recognition principle dictates that revenue be recognized in the accounting period in which it is earned.

answer

True

question

Expense recognition often follows revenue recognition.

answer

True

question

The revenue recognition principle and the matching principle are helpful guides used in determining net income or net loss for a period.

answer

True

question

Revenue received before it is earned expenses paid before being used or consumed are both initially recorded as liabilities.

answer

False

question

Accrued Revenues are revenues that have been received but not yet earned.

answer

False

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