ACCT 001 Lecture Notes - Lecture 29: Sole Proprietorship, Net Profit, Income Statement

11 views2 pages

bronzegrasshopper664

23 Sep 2020

School

College of The Sequoias

Department

Accounting (ACCT)

Course

ACCT 001

Professor

lindsay

For unlimited access to Class Notes, a Class+ subscription is required.

Document Summary

This is an account on the balance sheet under shareholder"s equity. Retained profit = retained profit at beginning of period + net profit over period - dividends issued. Once profit is calculated for a period it is added to the profits present at the beginning of the period. The board of directors will then decide whether to give dividends to shareholders and the remaining is retained profits. Profit is part of the equity account of the balance sheet. The change in retained profits will come from the income sheet and net profit account, as well as dividends taken into account. The income"s statements final line can be statement of retained profits which is used for the balance sheet. Many people from managers to investors and observers are interested in the income sheet and balance sheet because it shows the performance of a company and allows them to make informed decisions. The most important factor for shareholders is profitability.

Related Questions

QUESTION 1

The ownership of a corporation is represented by:

		shares of stock.
		the owner's capital account.
		the revenue account.
		cash in bank account.

QUESTION 2

How many classifications does a Capital Stock Account have?

		One
		Two
		Three
		Four

QUESTION 3

The equity contributed by stockholders and equity earned throughbusiness profits represent the stockholders' equity for a:

		partnership firm.
		sole proprietorship.
		corporation.
		none of these.

QUESTION 4

Retained earnings are a part of a/an:

		asset account.
		permanent account.
		stockholders' equity account.
		temporary account.

QUESTION 5

How many sections does an Income Statement have?

		Two
		Three
		Four
		Five

QUESTION 6

Net sales are related to the:

		net income section.
		gross profit on sales section.
		revenue section.
		cost of merchandise sold section.

QUESTION 7

Sales discount and sales return and allowance are:

		revenue accounts.
		contra revenue accounts.
		permanent accounts.
		contra expenses accounts.

QUESTION 8

The total cost related to merchandise purchases during anaccounting period is the:

		net purchase.
		cost of merchandise sold.
		cost of merchandise available for sale.
		beginning merchandise inventory.

QUESTION 9

The gross profit on sale is $65,000, and operating expenses is$35,000. What will be the operating profit?

		$65,000
		$35,000
		$100,000
		$30,000

QUESTION 10

A balance sheet has the following sections:

		Assets, liabilities, and stockholders' equity.
		Income, expenses, and stockholders' equity.
		Assets, liabilities, and income.
		Operating income, operating expenses, and stockholders'equity.

QUESTION 11

A cash flow statement is used to assess the:

		net increase or decrease of cash.
		net increases of cash only.
		net decrease of cash only.
		net profit or loss of business.

All of the following statements regarding stock dividends are trueexcept:

Directors can use stock dividends to keep the market price of thestock affordable.

Stock dividends provide evidence of management's confidence thatthe company is doing well.

Stock dividends do not reduce assets or equity.

Stock dividends decrease the number of shares outstanding.

Stock dividends transfer a portion of equity from retained earningsto contributed capital.

A stock dividend:

Is not a liability on the balance sheet.

Does not reduce a corporation's assets and stockholders'equity.

Transfers a portion of equity from retained earnings to contributedcapital.

Does not affect total equity, but does affect the components ofequity.

All of these.

Prior period adjustments are reported in the:

Multiple-step income statement.

Balance sheet.

Statement of retained earnings.

Statement of cash flows.

Single-step income statement.

The withdrawals account of each partner is:

Closed to that partner's capital account with a credit.

Closed to that partner's capital account with a debit.

A permanent account that is not closed.

Credited with that partner's share of net income.

Debited with that partner's share of net loss.

A bonus may be paid:

	By a new partner when the current value of a partnership is greaterthan the recorded amounts of equity.
	By a withdrawing partner to remaining partners if the recordedvalue of the equity is overstated.
	To a new partner with exceptional talents.
	By remaining partners to a withdrawing partner if the recordedequity is understated.
	All of these.

periwinklecamel697

In addition to presenting the computed answers, please also discuss how you arrived at each answers the accounting problem asks. The accounting problem presents a companyâs balance sheet and income statement. The Diamond Gem Cleaning and Maintenance Service Company is in the business of contracting its cleaning and maintenance services to office buildings. The balance sheet and income statement have blank lines. Determine the values that would be appropriate for each blank line. Provide a narrative of how you arrived at each value. In doing so, explain the account being valued and its relationship to the other financial data. For example, if the accounts payable line was missing, explain that you can derive its value based on knowing all the other values of the current liabilities section. Then explain what an account liability is, as well as why it would belong in the current liabilities section of the balance sheet

Please refer to the income statement and balance sheet of the Diamond Gem Cleaning and Maintenance Service Company available down:

Superior papers will mention and explain the following elements when responding to the assignment question:

Provide correct balances for the blank financial account lines.

Provide a narrative about how the values were determined.

Provide a definition and explanation of each account line that was completed

Balance sheet
ASSETS

CURRENT ASSETS

Cash		225,971
Contracts receivables		[__A____]
Other assets		162,847

Total current assets		893,868

LONG TERM ASSETS

Equipment		[___B____]

TOTAL ASSETS		1,180,660

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

Accounts payable		[__C____]
Line of credit		85,000
Accrued expenses		72,495
Income tax payable		46,660
Current portion of notes payable		31,747
Deferred income taxes		78,460

Total current liabilities		571,697

LONG TERM LIABILITIES
Notes payable (long term)		172,467

TOTAL LIABILITIES		744,164

STOCKHOLDERS' EQUITY

Common stock	62,000
Additional paid-in capital	63,862

Retained Earnings	[___D___]

Total stockholders' equity		436,496

TOTAL LIABILITIES AND STOCKHOLDERS EQUITY		[___E___]

Income sheet

Contract Revenues	5,146,862

Contract Costs	[___F____]

Gross Profit	614,343

General and Administrative Expenses	322,356

Operating Income	291,987

Other Expense	25,770

Income Before Provision for Income Taxes	266,217

Provision for Income Taxes	[__G____]

Net Income	150,767


Retained Earnings, Beginning Balance	[__H____]

Net Income	150,767

Retained Earnings, Ending Balance	310,634

cyanmosquito456

ACCT 001 Lecture Notes - Lecture 29: Sole Proprietorship, Net Profit, Income Statement

Document Summary

Get access

Related Documents

ACCT 001 Lecture Notes - Lecture 5: Accounting Equation, Net Profit, Income Statement

ACCT 001 Lecture Notes - Lecture 5: Double-Entry Bookkeeping System, Accounting Equation, Income Statement

ACCT 001 Lecture Notes - Lecture 4: Financial Statement, Myofascial Trigger Point, Current Liability

Related Questions