Balance Sheet Income Statement
Statement of Cash
Flows Assets = Liabilities +
Stockholders'
Equity Revenue − Expense = Net Income
Balance Sheet Income Statement
Statement of Ca Assets = Liabilities + Stockholders' Equity Revenue − Expense = Net Income
D NA D NA I D D
Paying expenses such as salaries is an asset use transaction that decreases the business's assets (cash) and decreases its stockholders’ equity (retained
earnings). Note that the expense decreases net income, and will decrease retained earnings at the end of the accounting period. It is reported as a cash flow
for operating activities in the statement of cash flows.
References
Short Answer Difficulty: 3 Hard Learning Objective: 01-10 Record business events using a horizontal
financial statements model.
13.
Award: 10.00 points
14.
Award: 10.00 points
Indicate how this event affects the accounting equation. Use the following letters to record your answer in the box shown below each element. If an event
increases one account and decreases another account within the same element, record I/D. If an event has no impact on the element, record NA. You do not
need to enter amounts.
Increase = I Decrease = D Not Affected = NA
Epstein Company paid a $20,000 cash dividend to its stockholders.
Balance Sheet Income Statement
Statement of Cash
Flows Assets = Liabilities +
Stockholders'
Equity Revenue − Expense = Net Income
Balance Sheet Income Statement
Statement of Ca Assets = Liabilities + Stockholders' Equity Revenue − Expense = Net Income
D NA D NA NA NA D
Paying a cash dividend is an asset use transaction that decreases a business’s assets (cash) and its stockholders’ equity. The dividends account will decrease
the retained earnings at the end of the accounting period. It does not affect net income, and is reported as a cash outflow for financing activities in the
statement of cash flows.
References
Short Answer Difficulty: 3 Hard Learning Objective: 01-10 Record business events using a horizontal
financial statements model.
Indicate how this event affects the accounting equation. Use the following letters to record your answer in the box shown below each element. If an event
increases one account and decreases another account within the same element, record I/D. If an event has no impact on the element, record NA. You do not
need to enter amounts.
Increase = I Decrease = D Not Affected = NA
North Company issued a note to purchase a building.
Balance Sheet Income Statement
Statement of Cash
Flows Assets = Liabilities +
Stockholders'
Equity Revenue − Expense = Net Income
Balance Sheet Income Statement
Statement of Ca Assets = Liabilities + Stockholders' Equity Revenue − Expense = Net Income
I I NA NA NA NA NA
Issuing a note to purchase a building is an asset source transaction that increases a business's assets (building) and increases its liabilities (notes payable). It
does not affect net income or the statement of cash flows.
References
Short Answer Difficulty: 3 Hard Learning Objective: 01-10 Record business events using a horizontal
financial statements model.
15.
Award: 10.00 points
16.
Award: 10.00 points
17.
Award: 10.00 points
What is the name of the group that has the primary authority for establishing U.S. GAAP?
The Financial Accounting Standards Board (FASB) is a privately funded organization with the primary authority for establishing accounting standards in the
United States.
References
Short Answer Difficulty: 1 Easy Learning Objective: 01-01 Identify the ways accounting benefits
society.
Who are the three distinct types of participants in a market? Briefly describe the role of each group of participants.
The market for business resources involves three distinct participants: consumers, businesses, and resource owners. Consumers use resources. Businesses
convert resources to the form that consumers want. Resource owners control the distribution of resources to businesses.
References
Short Answer Difficulty: 2 Medium Learning Objective: 01-01 Identify the ways accounting benefits