statement of changes in
stockholders equity, and a
balance sheet.
What is meant by the term double-entry bookkeeping?
All transactions affect the accounting equation in at least two places.
Double-entry bookkeeping is necessary to maintain the balance of the accounting equation: Assets = Liabilities + Stockholders’ Equity.
References
Short Answer Difficulty: 1 Easy Learning Objective: 01-04 Show how business events affect the
accounting equation.
27.
Award: 10.00 points
28.
Award: 10.00 points
29.
Award: 10.00 points
30.
Award: 10.00 points
Give three examples of asset use transactions.
Paid loan, paid expense, and paid dividends to stockholders
Asset use transactions involve a decrease in assets (for example, cash) and will also result in a decrease in either liabilities (paid loan) or stockholders’ equity
(paid expense or dividends).
References
Short Answer Difficulty: 2 Medium Learning Objective: 01-06 Classify business events as asset source,
use, or exchange transactions.
What does a company's statement of cash flows tell you about the company?
The statement of cash flows tells how a company obtained and used cash during the accounting period. In other words, it explains the change in cash from the
beginning to the end of the period.
References
Short Answer Difficulty: 1 Easy Learning Objective: 01-08 Prepare a statement of cash flows.
If a corporation issues common stock for $50,000 cash, in which section of the statement of cash flows will this transaction be reported?
Issuing stock is reported in the financing activities section.
All cash exchanged between a company and its stockholders is considered a financing activity.
References
Short Answer Difficulty: 1 Easy Learning Objective: 01-08 Prepare a statement of cash flows.
Which types of accounts are closed out to retained earnings at the end of an accounting period?
Revenues, expenses, and dividends are temporary accounts and are closed to retained earnings at the end of the accounting period.
These accounts are called temporary, or nominal, accounts. Note that dividends are reported on neither the income statement nor the balance sheet.
References
Short Answer Difficulty: 1 Easy Learning Objective: 01-09 Distinguish between permanent and
temporary accounts.
31.
Award: 10.00 points
32.
Award: 10.00 points
Name and briefly describe each of the four financial statements.
The balance sheet lists the assets of a business and corresponding claims (liabilities and stockholders' equity) on those assets. It draws its name from the
accounting equation.
The income statement matches revenue (benefits) with the expenses (sacrifices) that were incurred to generate the revenue.
The statement of changes in stockholders' equity is used to explain the effects of transactions on stockholders' equity during an accounting period.
The statement of cash flows explains how a company obtained and used cash during the accounting period. The statement classifies cash receipts (inflows)
and payments (outflows) into three categories: financing activities, investing activities, and operating activities.
References
Short Answer Learning Objective: 01-07
Prepare an income statement, a
statement of changes in
stockholders equity, and a
balance sheet.
Difficulty: 3 Hard Learning Objective: 01-08
Prepare a statement of cash
flows.
What is meant by the term "accounting period?"
An accounting period is the span of time covered by the financial statements, normally one year; the span of time for which income is measured.
References
Short Answer Learning Objective: 01-03 Identify
the elements of the accounting
equation.
Difficulty: 1 Easy Learning Objective: 01-07
Prepare an income statement, a
statement of changes in
stockholders equity, and a
balance sheet.
33.
Award: 10.00 points
34.
Award: 10.00 points
Indicate whether each of the following statements about markets is true or false.
a. Financial resources can be provided to a business by other businesses.
b. Resource owners are the businesses that transform resources into products that satisfy consumer desires.
c. Labor resources include the both the physical and intellectual labor of a business's employees.
d. Businesses purchase their resources from resource owners.
e. Consumers are the main providers of resources in any market.
a. F
b. F
c. T
d. T
e. F
Financial resources are provided to a business by investors and creditors. Businesses, not resource owners, transform resources into products. Resource
owners are the main providers of resources in any market.