Ch02 Test
Terms
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- What are the four major financial statements?
- Income statement, statement of owner's equity, balance sheet, and cash flow statement
- What are revenues?
- Are the value of asses exchanged for products and services provided to customers.
- What are assets?
- Economic resources held by a business.
- What are expenses?
- The costs incurred or the using up of assets from generating revenue
- What are the Income statement heading identifiers?
-
The Business Name
Income Statement
The Time Period Covered - What is the statement of owner's equity?
- Total Assets - Total liabilities
- What does S of O E represent?
- How much of the assets belong to the owner. i.e. the owner's claim on the assets of a company
- What causes owner's equity to increase?
- Owner's investments and Net Income
- What causes owner's equity to decrease?
- Owner withdrawals and Net Loss
- What are owner investments?
- When the owner transfers personal assets into the business
- What are owner withdrawals?
- Occur when the owner takes cash or other assets from the business. Represent a distribution of net income to the owner.
- What does the S of O E report?
- Reports on the changes in equity over the reporting period.
- What does the Balance Sheet report?
- The financial position of a business at a point in time (usually at the end of a month or year)
- What does it list?
- The types and dollar amounts of assets, liabilities, and equity.
- What are GAAP?
- Rules that make up acceptable accounting practices.