Income Statement
What is the order of the Income Statement.
1.Revenues
2. Expenses
3. Net Income
What is the basic Accounting Equation?
Assets = Liabilities + Stockholders Equity
What is the order of the financial statements?
1. Income Statement
2. Retained Earnings
3. Balance Sheet
4. Statement of Cash Flows
Generating Net Income does what for stockholders?
Increases Stockholders Equity
Negotiations of a deal between 2 companies takes place for a future endeavor. Is this recorded in a journal entry?
No
Not until the exchange of goods/services has taken place or obligations were satisfied will this activity be recorded.
The Income Statement contains which type of accounts?
Revenues
Expenses
Which of the following must have at least 2 owners?
1. Corporation ?
2. Sole Proprietorship ?
3. Partnership ?
Partnership
What type of accounts will you typically see on a Balance Sheet?
Assets
Liabilities
Stock Holders Equity
What is Common Stock?
Stocks purchased by owners of the company.
In the unadjusted trial balance, debits= ?
Credits!
If Net Income is $522 and Revenues were $2,500.
What were the Expenses equal to?
$1,978
What are the standards governing the Accounting industry called?
G.A.A.P
Generally Accepted Accounting Principles
What do total assets equal?
Total Liabilities & Stockholders Equity = Total Assets
Revenue is 4750
Dividends are 200
Expenses are 2000
What is Net Income?
Net Income = 4750 - 2000
2750 = Net Income
Is the normal account balance of cash debit or credit?
Debit
How is Net Profit Margin calculated?
Net Income / Revenues = Net Profit Margin
Does a company have to pay back Equity Financing?
No.
The company does not owe any obligation to its investors/ shareholders.
How do you calculate Current Ratio?
Current Assets / Current Liabilities
What is the calculation for your new Retained Earnings?
Previous Retained Earnings
+ Net Income
- Dividends (If Any)
= New Retained Earnings
Which of the following are Current Assets?
1. Accounts Receivable
2. Equipment
3. Prepaid Rent
1. Yes
2. No
3. Yes
What is the expense recognition principle?
Expenses are recorded in the same period in which the related revenues are recorded.
Say a company purchases material for a project but can't sell the object till the next quarter. The expense will be recognized when the object is sold.
Cash payment is collected in May for services provided in March. What type of journal entries will be recorded?
1. Debit to Cash
2. Credit to Accounts Receivable
What does Current Ratio refer to?
The ability of the company do pay its creditor/ its liabilities.