Accounting Equation
What is the accounting equation?
Assets = Liabilities + Stockholder's Equity
What are the 4 financial Statements?
Income statement, balance sheet, Statement of retained earnings, Statement of Cash flows
What is manufacturing overhead?
indirect materials, indirect labor, other indirect costs associated with the factory
What are the 3 accounting accounting activities?
Identify: Identify economic events
Record: Classify and summarize economic events
Communicate: Analyze, interpret, and explain economic events for interested users
Resources owned by the business that will provide the business with future economic benefit are ______?
Assets
What 2 accounts make up stockholder's equity?
Common Stock + Retained Earnings
What financial statement must list the assets in order of liquidity and is a snapshot in time?
Balance Sheet
What is the difference between a period and a product cost? Give examples
Product costs: Necessary and integral parts of producing the finished product also referred to as manufacturing costs. (ex- Direct materials, Direct labor, and Manufacturing overhead)
Period Costs: Selling and admin costs that are incurred to generate revenue (ex- Advertising, marketing, sales commisions, shipping costs, accounting, and management)
What are the two types of users of accounting and give two examples of each?
Internal Users: Make decisions for businesses (Managers, company officers, production supervisors, finance directors)
External Users: make decisions for themselves regarding the business (Investors, creditors, tax authorities, regulatory agencies, and customers)
Debt and obligations are ____? Give 2 examples.
Liabilities: Claims against a company's resources
Examples: Accounts payable, notes payable, salary and wages payable, ANY Payable
What 3 accounts make up retained earning?
Revenue - Expenses - Dividends
What 3 labels go at the top of the income statement?
Company Name, Income Statement, For the period ending XX/XX/XX
What is the cost of goods manufactured equation?
Beginning Work in Process + Total Manufacturing Costs - Ending Work in Process
What is the correct order of the following assets from most liquid to least liquid: accounts receivable, work in process, prepaid expenses, finished goods, cash, raw materials?
Cash, Accounts receivable, finished goods, work in process, raw materials, prepaid assets
Dividends are an expense: T or F?
False
How do purchases of supply on credit affect the accounting equation?
Increases Supplies (asset), Increases Accounts payable (liability)
How is the statement of retained earnings connected to the balance sheet?
The end balance of retained earnings is needed in preparing the balance sheet.
What are the three inventory accounts? Explain each one
Raw Materials: Items purchased to make finished goods
Work in process - Partially completed manufactured units
Finished Goods - Completed product to be sold
What is the equation for net income?
Revenue - expenses
Corporation A receives cash from a customer who had been billed for services. How does this affect the accounting equation?
Increase cash account, decrease accounts receivable
Courtney had total assets of $800,000 and total liabilities of $560,000 at the beginning of the year. During the year, total liabilities decreased by $80,000 and stockholders' equity increased by $250,000. What is the amount of total assets at the end of the day?
Assets = $970,000
What are the 3 sections of the statement of cash flows?
Cash from operating, cash from investing, cash from financing
For the year, B Company has cost of goods manufactured of $800,000, a beginning finished goods inventory of $340,000, and an ending inventory of $200,000. The cost of goods sold is ____?
$940,000
What are the 3 management functions? Explain each one
Planning- maximize short-term profit and market share, add value to business, plan objectives such as environmental protections and social programs
Directing- Coordinate diverse activities and HR, implement planned objectives, provide incentives to motivate employees, hire employees
Controlling- Keep and maintain activities on track, determine whether goals are met, decide changes needed to get back on track
4 types of accounting
Public accounting, private accounting, governmental accounting, forensic accounting, actuary