CHAPTER ONE
cash, supplies, accounts receivable, inventory, prepaid expenses, are what...
current assets
financial debts a company owes to another party, person, or company.
liability
This financial statement measures and presents a company's profitability.
what is income statement.
This category represents the remaining difference between assets and liabilities and reflects ownership.
Stockholder's Equity
What type of accounting does financial accounting use?
Accrual Accounting
WHAT IS THE BASIC ACCOUNTING EQUATION?
ASSET= LIABILITIES + STOCKHOLDERS' EQUITY
If you paid $70 for equipment what happens to the accounting equation?
Equipment goes up by $70
Cash goes down by $70
Name at least two expenses
Wages expense
Advertising expense
Rent expense
Utilities Expense
cost of goods sold
Despite having the word "revenue" in its name, this account is actually a liability.
What is Deferred/Unearned Revenue
When does accural accounting recongition revenue?
After a service or sale has been done/delivered
What type of business has limited liability?
Corporation
A company has total assets of $148,000 and total liabilities of $91,000. What is total stockholders' equity?
$57,000
This term describes the costs of doing business.
Expenses
You prepaid rent costing $500 on July 1st . It is now July 31st. What do we need to record when we used up rent.
What is the income statement equation?
Revenue-Expenses=Net Income/(net loss)
What account is associated with a service/sale you have not done but got paid for in advance?
Liability: Unearned Revenue/Deferred Revenue
What are the two type of accounts that will be affected when your company does a service for a customer on account?
If revenues are less than expenses what should the company report as their net income?
Net Loss
This principle says revenue is recorded when the seller provides goods or services to customers.
Revenue Recognition
What does GAAP stand for?
Generally Accepted Accounting Principles
Ending Retained Earnings= Beginning +/- Net Income - Dividends
A company signs a $15,000 contract to purchase software next month. No software has been received and no cash has been paid. What should the company record today?
No transaction
Company A reports revenues of $80,000 and total expenses of $92,000. What is net income?
Net loss of (12,000)
A company pays $5,000 toward an amount it owes an equipment vendor. These two accounts decrease.
what is Accounts Payable
A company collects cash from a customer who previously bought on account. This asset decreases when the cash is collected.
Accounts Receivable