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Questions and Answers
What are Accounts Receivable?
What are Accounts Receivable?
Long term debt is a?
Long term debt is a?
Merchandise inventory is?
Merchandise inventory is?
Prepaid expenses are?
Prepaid expenses are?
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Accrued expenses payable are?
Accrued expenses payable are?
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Equipment is?
Equipment is?
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Notes payable are?
Notes payable are?
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Retained earnings are?
Retained earnings are?
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Land is?
Land is?
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Accounts payable is?
Accounts payable is?
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Common stock is?
Common stock is?
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Supplies are?
Supplies are?
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What forms of organization will enable the owners of Regal Signs to limit their risk of loss?
What forms of organization will enable the owners of Regal Signs to limit their risk of loss?
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Creditors can force the owners to pay the business's debts from their personal assets if any of these businesses fails.
Creditors can force the owners to pay the business's debts from their personal assets if any of these businesses fails.
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The most an investor can expect to lose on an investment in these businesses is?
The most an investor can expect to lose on an investment in these businesses is?
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What form of business organization will give Megan Regal the most freedom to manage the business as she wishes?
What form of business organization will give Megan Regal the most freedom to manage the business as she wishes?
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Proprietorships offer the most freedom because?
Proprietorships offer the most freedom because?
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What form of organization will give creditors the maximum protection in the event that Regal Signs, Inc., fails?
What form of organization will give creditors the maximum protection in the event that Regal Signs, Inc., fails?
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If a partnership fails and cannot pay its liabilities, creditors can force the partners to pay the business's debts from their personal assets.
If a partnership fails and cannot pay its liabilities, creditors can force the partners to pay the business's debts from their personal assets.
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Partnerships afford more protection for creditors than a?
Partnerships afford more protection for creditors than a?
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On which financial statement are accounts payable listed?
On which financial statement are accounts payable listed?
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On which financial statement is inventory listed?
On which financial statement is inventory listed?
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On which financial statement is interest revenue listed?
On which financial statement is interest revenue listed?
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On which financial statement is long-term debt listed?
On which financial statement is long-term debt listed?
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On which financial statement is net cash used for financial activities listed?
On which financial statement is net cash used for financial activities listed?
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On which financial statement is salary expense listed?
On which financial statement is salary expense listed?
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On which financial statement is cash listed?
On which financial statement is cash listed?
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On which financial statement are dividends listed?
On which financial statement are dividends listed?
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On which financial statement are the increase or decrease in cash listed?
On which financial statement are the increase or decrease in cash listed?
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On which statement is net income listed?
On which statement is net income listed?
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On which financial statement is net cash provided by operating activities listed?
On which financial statement is net cash provided by operating activities listed?
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On which financial statement are retained earnings listed?
On which financial statement are retained earnings listed?
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On which financial statement is sales revenue listed?
On which financial statement is sales revenue listed?
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On which financial statement is common stock listed?
On which financial statement is common stock listed?
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Ethics is the factor that?
Ethics is the factor that?
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Ideally, for each ethical decision?
Ideally, for each ethical decision?
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Which three questions are important to consider when making an ethical decision?
Which three questions are important to consider when making an ethical decision?
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Liabilities + stockholders' equity = ?
Liabilities + stockholders' equity = ?
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Assets - stockholders' equity = ?
Assets - stockholders' equity = ?
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Assets - liabilities = ?
Assets - liabilities = ?
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(Liabilities / Assets) * 100 = ?
(Liabilities / Assets) * 100 = ?
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Heading of income statement?
Heading of income statement?
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Revenue on income statement?
Revenue on income statement?
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Expenses on income statement?
Expenses on income statement?
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Heading of statement of retained earnings?
Heading of statement of retained earnings?
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On retained earnings, you add?
On retained earnings, you add?
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On retained earnings, you subtract?
On retained earnings, you subtract?
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Heading on balance sheet?
Heading on balance sheet?
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Current assets on balance sheet?
Current assets on balance sheet?
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Long-term assets on balance sheet?
Long-term assets on balance sheet?
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Current liabilities on balance sheet?
Current liabilities on balance sheet?
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Long-term liabilities on balance sheet?
Long-term liabilities on balance sheet?
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What goes under stockholders' equity on a balance sheet?
What goes under stockholders' equity on a balance sheet?
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Study Notes
Key Concepts in Accounting
- Accounts Receivable: Considered assets; funds owed to a company by customers.
- Long-Term Debt: Classified as liability; obligations due beyond one year.
- Merchandise Inventory: Recognized as an asset; includes goods held for sale.
- Prepaid Expenses: Treated as assets; payments made in advance for goods or services.
- Accrued Expenses Payable: Defined as liabilities; expenses incurred but not yet paid.
- Equipment: Categorized as assets; physical items used in business operations.
- Notes Payable: Classified liabilities; written promises to pay specific amounts at future dates.
- Retained Earnings: Represent stockholders' equity; accumulated profits not distributed as dividends.
- Land: Considered an asset; physical property owned by a business.
- Accounts Payable: Recognized liabilities; amounts a company owes to suppliers.
Business Organization Types
- Corporation, Limited-Liability Partnership (LLP), Limited-Liability Company (LLC): Organizations that limit owners’ risk of loss to amounts invested.
- Proprietorship: Provides maximum freedom for management; owned by one individual.
- Partnership: Offers increased protection for creditors, as multiple owners share liability.
Financial Statements Overview
- Balance Sheet: Lists accounts payable, inventory, long-term debt, cash, common stock, and retained earnings.
- Income Statement: Reports revenue, expenses, and net income.
- Statement of Cash Flows: Documents net cash used for financial activities, operating activities, and overall cash flow changes.
Ethical Considerations in Accounting
- Ethics: Essential in every business and accounting decision; considers potential economic and legal consequences.
- Integrity in Decision-Making: Honesty and truthfulness should be prioritized.
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Key Ethical Questions:
- Is the action legal?
- Who will be affected by the decision?
- How will the decision affect my feelings afterwards?
Fundamental Accounting Equations
- Assets = Liabilities + Stockholders' Equity
- Liabilities = Assets - Stockholders' Equity
- Stockholders' Equity = Assets - Liabilities
- Percent of Liabilities = (Liabilities / Assets) * 100
Financial Statement Headings
- Income Statement: Headed by company name, type of statement, period end date.
- Statement of Retained Earnings: Similar heading structure as the income statement.
- Balance Sheet: Follows a specific heading format including company name and date.
Assets Classification
- Current Assets: Include cash and accounts receivable.
- Long-Term Assets: Comprise notes receivable and equipment.
- Current Liabilities: Primarily consist of accounts payable.
- Long-Term Liabilities: Typically involve notes payable.
Stockholders' Equity Components
- Common Stock: Represents ownership in the corporation.
- Retained Earnings: Calculated by adding net income and subtracting dividends from the previous period.
These study notes summarize essential accounting definitions, principles, ethical considerations, and classifications relevant to the foundational understanding of financial statements and business organization types.
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Description
This quiz covers essential accounting concepts including accounts receivable, long-term debt, merchandise inventory, and more. Test your knowledge on how different financial elements are classified in a business context. Ideal for students and professionals looking to solidify their foundational understanding of accounting.
