ACC-1A Lecture Notes - Lecture 5: Accrual, Income Statement, Accounts Receivable

10 views2 pages

lemonwater-buffalo623

11 Sep 2020

School

Department

Course

Professor

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

Document Summary

Shows the results of business operations over a specific time. Reports revenues earned, less any expenses incurred. Calculates the profit that may be available to shareholders. If revenues are greater than expenses, there is a profit. If revenues are less than expenses, there is a loss. Remember: accrual profit is not the same as cash profit. Title (name of company, income statement , time period) Other revenue/operating expense net profit (less income tax expense net profit after tax) Revenue represents an increase in the wealth of the business. There is a promise to pay cash (accounts receivable) Expenses represent decreases in the entity"s wealth. Note: expenses do not include payments or returns to owners (i. e. withdrawals by sole traders or partners, or, dividends to shareholders). Payments to owners are distributions of net profit to owners. Long term assets wear out (i. e. depreciation) Assets are used up (e. g. prepayments, inventory)

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.

Indicate and explain whether each of the following independentsituations should be treated as a temporary difference or apermanent difference.

(a) For accounting purposes, a company reports revenue frominstallment sales on the accrual basis. For income tax purposes, itreports the revenues by the installment method, deferringrecognition of gross profit until cash is collected.

(b) Pretax accounting income and taxable income differ because80% of dividends received from U.S. corporations was deducted fromtaxable income, while 100% of the dividends received was reportedfor financial statement purposes.

(c) Estimated warranty costs (covering a three-year warranty)are expensed for accounting purposes at the time of sale butdeducted for income tax purposes when paid.

True/Make true questions in the âFinancial Statementsâ

1. Peachtree automatically calculates financial statements oncejournal entries have been journalized and posted.

2. In Chapter 7, you printed three financial statements.

3. The statement of cash flow is roughly the same thing as abalance sheet.

4. The balance sheet lists the revenues and expenses of thebusiness.

5. The income statement is a summary of the revenue and expensesof a company for a period of time, such as an accounting period ora year.

bluedeer170

ACC-1A Lecture Notes - Lecture 5: Accrual, Income Statement, Accounts Receivable

Document Summary

Get access

Related Documents

ACC-1A Lecture Notes - Lecture 27: Matching Principle, Accounts Receivable

ACC-1A Lecture Notes - Lecture 18: Cash Flow Statement, Retained Earnings, Financial Statement

ACC-1A Lecture Notes - Lecture 28: Book Value, Vertical Integration

Related Questions