Financial Statements
Reports Assets, Liabilities, and Stockholder's Equity
Balance Sheet
What is the equation for the Balance Sheet
Assets=Liabilities+Stockholder's Equity
The measurement rules used to develop the information in the financial statements in the US
What is GAAP (Generally Accepted Accounting Principles)
Record issuance of $ 2,000 of Common Stock for Cash
Debit Cash
Credit Common Stock
Is the accounting equation balanced:A=L+SE
What is the impact on the equation if you purchased supplies for $400 on account.
Record the transaction
Yes
Assets (type of asset Supplies) and Account Payable (liability) both increase
Supplies debited $400
Accounts Payable credited $400
What accounts are closed at year end?
Temporary Accounts-Revenue and Expenses
What is included in the closing entry: Debit revenue and credit the expense accounts and dividend and credit Retained Earnings.
Revenues and expenses for the accounting period are reported on which financial statement
What is an Income Statement?
What is the Income Statement Equation
Net Income=Revenues-Expenses
The US has the same reporting standards as the rest of the world-True or False
False (IFRS: International Financial Reporting Standards)
When a company sales a product to a customer on account what accounts are debited and credited
Debit Accounts Receivable and Credit Revenue
On March 5, Carter's Company received $10,000 in cash from a customer for services to be provided in December. How would you record the transactions?
Debit Credit
Cash 10,000
Deferred Revenue 10,000
Record the following transaction:
Paid 2,500 in salaries for the month of September
Debit Credit
Salaries Expense 2,500
Cash 2,500
Name the four financial statements and the categories of account on each
Income Statement - Revenue and Expenses
Stockholders Equity Common Stock + Retained Earnings + Net Income - Dividends
Balance Sheet Asset, Liabilities and Ownership Equity
Cash Flow - Cash from Operations+Cash from Investing +Cash from Financing
Beginning Retained Earnings+Net Income-Dividends=Ending Retained Earnings is the equation for what financial statement
Statement of Retained Earnings
The body that writes the rules
FASB (Financial Accounting Standards Board)
The balance sheet is different in that it reports at ____________
a point in time example December 31, 2026
When Revenues increase what happens to NI,RE, and SE
What is Increase?
Determine net income with the following info:
Deferred Revenue 1,000
Service Revenue 3,000
Miscellaneous Expense 500
Common Stock 500
Salaries Expense 1,000
SR 3,000 - ME 500 and SE 1,000 = 1,500
Reports inflows and outflows of cash during the accounting period
Cash transactions involving normal operations such paying rent expense
What is Statement of Cash Flows?
What is operating activity
What impact will providing services to A1 Company for $10,000 cash have on the Accounting Equation
Assets will increase --Why cash received of $10,000
Stockholder's Equity increase -- Why Net income increase because Revenue received of $10,000 for services provided
What is a way to remember the rules for debiting and crediting types of accounts and determining the normal balance
Explain what the method means
After Eating Dinner, Let's Read Comics--A(Assets-items you own for your business-computer, building) E(Expense -accounts used to operate business such rent, salaries, and D (Dividend- Company pay based on the earnings --these 3 increase with debits so normal balance is debit(left) on T-Account L (Liabilities- what you owe such as Notes payable- loan, Acct payable) Revenue (rev you earn for services or sales,Capital/Stockholder Equity 3 categories increase with credits, therefore normal balance is Credit-on right of T-Account
Can you record revenue immediately for services provided in advance?
No, the revenue has not been earned
Net income is what amount; Service Revenue 3,000 Deferred Revenue 1,000, Rent Expense 500, Utilities Expense 240, Miscellaneous Expense 150, Cash 300 Accounts Receivable -800, Accounts Payable 850
What is 2,110? 3,000-500-240-150
What business entity is simple to form, but has unlimited liability
Corporation
Sole proprietorship
Partnership
All of the above
What is sole proprietorship?
Statements used to report Accounts Receivables and Utilities Expenses
What is the Balance Sheet and Income Statement
In the first year of operations, Assets=10,000, Liabilities=2,000, Revenues is 8,000 and Expenses 2,000 and Capital/SE of 3,000 and Dividends 1,000. What much is Capital/Stockholders Equity
What is $8,000? 8,000-2,000 +3,000 -1,000
Accounts on the Trial Balance
Examples of these categories
How many Trial Balances
Assets, Liabilities, Capital (SE), Revenue Expenses
Assets- e.g. Cash, Accounts Receivables, Supplies, Liabilities- e.g.Accounts Payable, Notes Payable,
Revenue-Services provided in cash are on account (Accounts Receivable)
Expenses-Rent Ex, Utilities Ex, Salaries Ex
Accounts Payable is what type of account
What is a Liability and appears on the Balance Sheet
What is the journal entry to adjust for prepaid insurance at year end.
Debit Insurance Expense
Credit Prepaid Insurance
A company pays dividends of 1,000 to its stockholders. What is the impact on the accounting equation?
How do you record the transactions?
Assets (cash) decrease by 1,000 and SH equity decrease (dividends) by 1,000
debit credit
Dividend 1,000
Cash 1,000