Are the following statements true or false?
Journal Entry:
-is a chronological record of transactions.
-does not require a brief explanation of a transaction.
-indicates the date a business decision was made.
-True
-False
-True
100
State the formula for Retained Earnings (RE)
Retained Earnings (RE) = Beg. RE + Net Income - Dividends
100
Does the balance sheet heading specify a:
period of time or point in time?
point in time
100
Which cash flow activity will be affected from a decrease in the Income Taxes Payable?
Operating
100
State the formula for Current Ratio.
Current Ratio = Current Assets / Current Liabilities
200
What is the purpose of Journal Entries?
Its purpose is to keep a day-to-day record of a business and its transactions.
200
What financial statement do you use to create the Statement of Retained Earnings?
Income Statement
200
What is the normal balance for an asset account, liability account, stockholders' equity/owner's equity accounts?
Asset: Debit
Liability: Credit
Equity: Credit
200
Which cash flow activity will be affected from an increase in Bonds Payable?
Financing
200
State the formula for Quick (Acid-Test) Ratio.
Quick (Acid-Test) Ratio = (Cash + Short-term invest. + Net Curr. Receiv.) / Total Curr. Liab.
300
What represents the ledger for each account in the chart of accounts?
T-Account
300
Where is the Retained Earnings recorded on the Balance Sheet?
Under Shareholders' Equity
300
If a company has $50000 in revenues, $37000 in expenses, and $3000 in dividend payments, how much does the company have in net gain or net loss?
Net gain of $23,000
300
Will an increase in the balance of Prepaid Insurance have a POSITIVE or NEGATIVE effect on cash? Explain why.
Negative, because prepaid insurance is a current asset and an increase in any asset account is assumed to have used cash.
300
What is the Current Ratio used for?
To give an idea of a company’s ability to pay back its short-term liabilities (debt and payables) with its short-term assets (cash, inventory, receivables).