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Chapter 1: Q19E (page 37)

Consider the following accounting terms and definitions, and match each term to the definition:

1. Accounting equation

2. Asset

3. Balance sheet

4. Expense

5. Income statement

6. Liability

7. Net income

8. Net loss

9. Revenue

10. Statement of cash flows

11. Statement of retained

earnings

a. An economic resource that is expected to be of benefit

in the future

b. Debts that are owed to creditors

c. Excess of total expenses over total revenues

d. Excess of total revenues over total expenses

e. The basic tool of accounting, stated as

Assets = Liabilities + Equity

f. Decreases in equity that occur in the course of selling

goods or services

g. Increases in equity that occur in the course of selling

goods or services

h. Reports on a business鈥檚 cash receipts and cash payments

during a period

i. Reports on an entity鈥檚 assets, liabilities, and stockholders鈥�

equity as of a specific date

j. Reports on an entity鈥檚 revenues, expenses, and net

income or loss for the period

k. Reports how the company鈥檚 retained earnings balance

changed from the beginning to the end of the period

Short Answer

Expert verified

The correct option is matched as follows:

1e
2a
3i
4f
5j
6b
7d
8c
9g
10h
11k

Step by step solution

01

Step-by-Step-SolutionStep 1: Explanation on Accounting Equation

The accounting equation is the general tool of accounting, which measures the resources and their claim.

02

Explanation on Income Statement

Income statement is the part of the financial statements issued by the entity at the end of the period, which exhibits the revenues and expenses of the business for the period.

03

Explanation on Statement of Retained Earnings

Statement of retained earnings is the part of the financial statements issued by the entity at the end of the period, which exhibits the change in the beginning balance of retained earnings

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Most popular questions from this chapter

Identifying users of accounting information

For each of the users of accounting information, identify whether the user is an external decision maker (E) or an internal decision maker (I):

a. customer

b. company manager

c. Internal Revenue Service

d. lender

e. investor

f. controller

g. cost accountant

h. SEC

Describe the similarities and differences among the four different types of business entities discussed in the chapter.

Suppose you are starting a business, Wholly Shirts, to imprint logos on T-shirts. In organizing the business and setting up its accounting records, you take your information to a CPA to prepare financial statements for the bank. Name the organization that governs the majority of the guidelines that the CPA will use to prepare financial statements for Wholly Shirts. What are those guidelines called?

The records of Felix Company show the following at December 31, 2018:

Assets & Liabilities: Equity:

Beginning: Common Stock \( 11,000

Assets \) 67,000 Dividends 8,000

Liabilities 11,000 Revenues 205,000

Ending: Expenses ?

Assets $ 46,000 Retained Earnings, January 1, 2018 45,000

Liabilities 34,000

Requirements 1. Compute the missing amount for Felix Company. You will need to determine Retained Earnings, December 31, 2018, and total stockholders鈥� equity, December 31, 2018. 2. Did Felix earn a net income or suffer a net loss for the year? Compute the amount.

For each transaction, identify the appropriate section on the statement of cash flows to report the transaction. Choose from: Cash flows from operating activities (O), Cash flows from investing activities (I), Cash flows from financing activities (F), or Is not reported on the statement of cash flows (X). If reported on the statement, decide whether the transaction should be shown as a positive cash flow (+) or a negative cash flow (鈥�):

a. The business received cash from the issuance of common stock.

b. Paid cash on accounts payable for office supplies purchased.

c. Performed services for a customer on account.

d. Cash dividends were paid to stockholders.

e. Received cash from a customer for services performed.

f. Purchased equipment with cash.

g. Paid rent for the month.

h. Purchased land; signed a note payable.

i. Paid employees wages for the week.

j. Incurred utility expense on account.
See all solutions

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