Accounting 1 7th Edition Chapter 5 Quiz and Flashcards

What is the total amount of the monthly utilities bill Boa received from Municipal Gas?

What is another term for fiscal period?

How often do public companies that trade their shares on stock exchanges typically issue financial statements?

What is the concept that requires expenses to be recorded in the same period as the revenue they helped to earn?

What is the main purpose of dividing the fiscal period into equal time periods?

According to the revenue recognition principle, when must revenue be recorded?

What is a commonality between the Income Statement and the Balance Sheet?

What is included in the Income Statement?

What is the purpose of the Chart of Accounts?

What is the revenue recognition principle?

What type of account would be credited when E.Boa sends a bill to J.Basso for her services?

When is the Income Statement typically prepared?

What is the effect of E.Boa's transaction with J.Basso on the Balance Sheet?

How are the total numbers presented in the Income Statement?

What is excluded from the new expanded equity account?

What type of account would be debited when E.Boa pays the monthly rent?

What is the classification of E.Boa's transaction with B.Singh?

What is the effect of E.Boa writing a cheque for the monthly rent payment on the Income Statement?

Fiscal Period

The fiscal period is a specific length of time used to calculate Net Income, also known as the financial period or accounting period.
The standard fiscal period is one year, but public companies may issue quarterly statements (every three months) to keep investors informed.

Generally Accepted Accounting Principles

The Time Period concept states that accounting takes place over specific time periods, known as fiscal periods, which are of equal length.
The Matching principle ensures that each expense item related to revenue earned is recorded in the same period as the revenue it helped to earn.
Revenue must be recorded in the exact period it is earned.

Income Statement

The Income Statement is a formal statement that summarizes a company's activity over a specific period.
The header includes "Month ended [date]" to indicate the period covered.
The statement follows the same formatting rules as a Balance Sheet, including single lines above and below totals, and dollar signs on the first revenue, expense, and net income.

Chart of Accounts

A Chart of Accounts is a list of ledger accounts and their numbers, arranged in ledger order.

Equity Transactions and Accounting Principles

Revenue transactions: E.Boa receives $450 in cash for services provided to J.Basso.
Revenue recognition principle: requires revenue to be recorded when the transaction is completed, and the seller has no other significant obligation.
Expense transactions: E.Boa writes a $3300 cheque for the monthly rent payment.

This quiz covers the concepts of fiscal period, net income, and accounting period in chapter 5 of Accounting 1, 7th Edition. It also touches on the topic of utility bills and their payment.