Fundamentals of Accounting - Exam 1 Stimulator Questions Fully Solved.
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Course
Fundamentals of Accounting
Institution
Fundamentals Of Accounting
Accounting - Answer a system that collects and processes (analyzes, measures, and records) financial information about an organization and reports that information to decision makers
Financial Accounting Reports - Answer - Periodic financial statements and related disclosures
- external de...
Fundamentals of Accounting - Exam 1
Stimulator Questions Fully Solved.
Accounting - Answer a system that collects and processes (analyzes, measures, and records) financial
information about an organization and reports that information to decision makers
Financial Accounting Reports - Answer - Periodic financial statements and related disclosures
*Balance Sheet* - Answer (Statement of Financial Position) reports the amount of assets, liabilities, and
stockholders' equity of an accounting entity at a point in time.
Structure of Balance Sheet - Answer 1. *Name of entity,* Maxidrive Corp.
2. *Title of the Statement,* Balance Sheet.
3. *Specific Date of the Statement,* At December 31, 2010
4. *Unit of Measure* (in thousands of dollars)
*Accounting Entity* - Answer the organization for which financial data are to be collected
- Liabilities + Stockholders' Equity: sources of financing for the economic resources
,- Liabilities: from creditors
- Stockholders' Equity: from stockholders
Financial Position - Answer the economic resources that the company owns and the sources of
financing for those resources
Assets - Answer the economic resources owned by the company; expected to provide future benefits
owned by the entity as a result of past transactions
Balance Sheet Assets: Cash - Answer the amount of cash in the company's bank accounts
Balance Sheet Assets: Accounts Receivable - Answer - amounts owed by customers from prior sales
- promise of future payment
- later collected in cash
Balance Sheet Assets: Inventories - Answer parts and completed but unsold 'disk drives' (product)
Balance Sheet Assets: Plant and Equipment - Answer factories and production machinery
Balance Sheet Assets: Land - Answer land on which the factories are built
Liabilities - Answer the company's debts or obligations
Accounts Payable - Answer - on the balance sheet under liabilities
- amounts owed to suppliers for prior purchases
- Result from the purchase of goods or services from suppliers on credit without a formal written
contract (or a note).
Notes Payable - Answer - on the balance sheet under liabilities
- amounts owed on written debt contracts
, - result from cash borrowings based on a formal written debt contract with lending institutions such as
banks
Stockholders' Equity - Answer indicates the amount of financing provided by owners of the business
and earnings.
Contributed Capital - Answer - On the balance sheet under stockholders equity
- amounts invested in the business by stockholders
- the investment of cash and other assents in the business by the owners
Retained Earnings - Answer - On the balance sheet under stockholders equity
- past earnings not distributed to stockholders
- the amount of earnings (profits) reinvested n the business (and thus not distributed to stockholders in
the form of dividends)
The *Income Statement* (Statement of Income, Statement of Earnings, Statement of Operation) -
Answer - reports the revenues less the expenses of the accounting period
(Revenue - Expenses = Net Income)
- reports the accountant's primary measure of performance in a business (profit, net income in
accounting)
*Accounting Period* - Answer - is the time period covered by the financial statements
Elements of the Income Statement: Revenues - Answer - Earned from the sale of goods or services to
customers
- Normally reported for goods or services that have been sold to a customer *whether or not they have
been paid for* (accounts receivable/promise of future payment included)
- Various terms are used in income statements to describe different sources of revenue (e.g., provision of
services, sale of goods, rental property).
*Sales Revenue: cash and promises received from the sale of goods and serves
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