Chapter 1
Financial accounting's purpose is to provide _____ information to external users
useful
Cash received for services performed, $100.
Dr. Cash
Cr. Service Revenue
What is also known as the statement of financial position
What is the balance sheet
Which financial statement contains revenues and expenses
The Income Statement
Assets - Liabilities = ???
Equity
What characteristic of faithful representations means having no material misstatements
Free-from-error
First step in accounting cycle
Obtain source documents
What account is prepaid rent
asset
Gross Profit
Name an equity account
Paid in capital, retained earnings, AOCI, etc.
Which assumption means a company’s ongoing life can be divided into artificial time periods for reporting purposes.
Periodicity assumption
Cash received in exchange for common stock, $300.
Dr. Cash
Cr. Common Stock
present obligations of an entity to transfer an economic benefit
Liabilities
What ratio has the formula COGS / Avg. Inventory
Inventory Turnover
What type of long-term asset is goodwill
Name 1/3 requirements for a element
must meet definition of an element, measurable, faithful representation
$600 cash received for sales of inventory costing $400
Dr. Cash $600
Cr. Sales Rev $600
Dr. COGS $400
Cr. Inventory $400
Name two examples of long-term asstes
Investments, PP&E, Intangibles, etc.
Name two out of the 4 OCI accounts
Unrealized Gain/Loss on AFS Securities, Gain/Loss on Foreign Currency Exchange, etc.
In what order are assets shown in the balance sheet
Liquidity
What federal was passed in 2002 in light of accounting scandals involving Enron and WorldCom
SOX
What do we close out revenues and expenses to?
Retained Earnings
When could a company consider an asset short-term when it converts into cash in more than a year
When the operating cycle is longer than a year
What is the Dupont Identity formula?
Equity Multiplier * Profit Margin * Asset T/O Ratio
Treasury stock appears in this section on the balance sheet
Shareholders' Equity