Recognizing revenue on account will ______.

balance sheet,
income statement,
statement of changes in stockholders equity

A change in stockholders' equity is caused by ______.

issuing stock,
incurring a cash expense,
earnings

Acquiring cash by issuing common stock ______.

increases cash,
increases common stock

On the statement of cash flows, issuing stock for cash increases cash flow from ______ activities.

financing

Gomez Company borrowed $10,000 from the State Bank on April 1, Year 1. The one-year note has a 6% rate of interest. On the Year 2 income statement, the amount of interest expense reported by Gomez is ______.

$150

Which of the following are found on the statement of changes in stockholders' equity?

Beginning retained earnings,
Dividends

Gomez Company borrowed $10,000 from the State Bank on April 1, Year 1. The one-year note has a 6% rate of interest. On the Year 1 income statement, the amount of interest expense reported by Gomez is ______.

$450

Addison Company borrowed $6,000 from the State Bank on June 1, Year 1. The one-year note has an 8% rate of interest. The cash outflow from operating activities that Addison will report on its Year 2 statement of cash flows is ______.

$480, The total amount of cash is paid at the maturity date May 31, Year 2.

Recognizing an accrued expense is a(n) ______ transaction.

claims exchange

When a company collects an account receivable, revenue is ______.

not affected

Recognizing revenue on account will _____.

have no effect on the statement of cash flows

Decreases in accounts payable are caused by ______.

payment of payables

Recognizing a cash expense for advertising will ______.

cause the amount of assets shown on the balance sheet to decrease,
cause a decrease in the net cash flow from operations shown on the statement of cash flows

Recognizing accrued expense is a claims _____ transaction.

exchange

Gomez Company borrowed $10,000 from the State Bank on April 1, Year 1. The one-year note has a 6% rate of interest. The cash outflow from operating activities that Gomez will report on its Year 2 statement of cash flows is ______.

$600

The collection of cash in settlement of an account receivable is a(n) ______ transaction.

asset exchange

Interest on a Notes Payable is recognized ______.

at the end of the accounting period

When a company recognizes revenue on account, the balance in the ______.

accounts receivable account increases and balance in the revenue account increases

Recognizing accrued interest expense affects the ______.

Balance sheet,
Income statement,
Statement of changes in stockholders equity

Revenues and expenses are recognized in the period in which cash is collected or paid under _____ basis accounting.

cash

True or false: A company recognized an accrued salary expense in Year 1 and paid its employees in Year 2. In Year 2 neither Salaries expense nor Salaries payable will change as a result of this transaction.

False: Salaries expense will not change, but Cash and Salaries payable will.

Issuing a note to borrow money affects the ______.

Statement of cash flows,
Balance sheet

Burns Company borrowed $4,000 from the State Bank on December 1, Year 1. The one-year note carried a 9% rate of interest. When the note is paid off at maturity, Burns Company will decrease cash ______

decrease notes payable and decrease interest payable

Which of the following are required by the Sarbanes Oxley Act?

Independent auditors conducting audits of public companies must register with the Public Company Accounting Oversight Board (PCAOB),
Firms that provide public audits are prohibited from providing a variety of other nonaudit services.

Gomez Company borrowed $10,000 from the State Bank on April 1, Year 1. The one-year note has a 6% rate of interest. On the Year 1 statement of cash flows, the amount of cash flow from operating activities reported by Gomez is ______.

0, Reason:
The total amount of cash is paid at the maturity date March 31, Year 2. Accordingly, zero would be paid in Year 1.

Decreases in accounts receivable are caused by ______.

collections of receivables

True or false: Collecting an account receivable does not affect the balance sheet.

False:
Collecting an account receivable is an asset exchange transaction that does not affect the total amount of assets shown on the balance sheet. Even so, it does affect the balance sheet because it affects the amount of cash versus the amount of accounts receivable shown on the statement.

An account receivable is an expectation to ______ in the future.

collect cash

Which of the following individuals must certify in writing that they have reviewed a company's financial reports and that the reports they reviewed present fairly the company's financial status?

Chief Financial Officer (CFO),
Chief Executive Officer (CEO)

When a company recognizes accrued interest expense, the balance in the expense account increases and the balance in the ______.

interest payable account increases

Declaring and paying a cash dividend ______.

decreases cash and retained earnings

Earning service revenue on account means cash ______.

will be collected in the future, even though the related service has been performed

Which principle of the AICPA Code of Professional Conduct requires members to strive continually to improve competence?

Due Care

Policies and procedures that a business implements to reduce opportunities for fraud and to assure that its objectives will be accomplished are called _____ _____.

internal controls

Addison Company borrowed $6,000 from the State Bank on June 1, Year 1. The one-year note has an 8% rate of interest. On the Year 2 income statement, the amount of interest expense reported by Addison is ______.

$200

Accounts receivable is a(n) ______.

asset

Which of the following accounts are reported on the balance sheet?

Accounts receivable,
Salaries payable

Issuing stock in exchange for cash will ______.

increase stockholders' equity,
be reported on the statement of cash flows

Salaries payable is reported on the ______.

balance sheet

Which of the following are reported on the income statement?

Salary expense,
Net income

Which of the following accounts are reported on the income statement?

Salaries expense,
Service revenue

The horizontal financial statements model is ______.

a teaching tool used to show how transactions affect the income statement, balance sheet and statement of cash flows

Collecting an accounts receivable affects financial statements by increasing ______.

cash flow

Gomez Company has a December 31 year end. The company borrows $4,000 from the State Bank on December 1, Year 1. The one-year note has a 9% rate of interest. On the Year 2 income statement, the amount of interest expense reported by Gomez is ______.

$330

When a company incurs a cash expense, the balance in the retained earnings account ______.

decreases

When a company recognizes an accrued expense, the amount of ______.

cash is not affected,
expense increases

True or false: Collecting an accounts receivable decreases stockholders' equity.

False:
The collection of an account receivable affects cash and accounts receivable and as a result has no effect on stockholders' equity

Recording accrued salary expense impacts the ______.

balance sheet,
income statement

When a company collects cash from an account receivable, cash ______.

increases and accounts receivable decreases

Liabilities are ______ related to the recognition of expenses.

sometimes, Liabilities are obligations that arise from both acquiring assets and recognizing expenses.

If a company has assets of $65,000 and liabilities of $30,000 then ______ must equal $35,000.

stockholders' equity

Providing services on account ______.

has no effect on the statement of cash flows

An obligation to pay cash to employees in the future is normally called salaries _____.

payable

True or false: Liabilities are expenses.

False: Liabilities are obligations, not expenses, that may arise from recognizing expenses.

Providing services on account affects the ______.

balance sheet, income statement, statement of changes in stockholders equity

When a company recognizes an expense on account, ______.

accounts payable and expenses increase

Ethical standards ______.

improve credibility,
promote trust

To help you understand how business events affect financial statements, the text uses a(n) _____ statements model.

horizontal financial

Grey Company earned $5,000 of revenue on account during Year 1, but collected the cash associated with the receivables in Year 2. Based on this information alone, under accrual accounting, the company will report ______.

net income of zero and cash inflow from operations of $5,000 in Year 2,
net income of $5,000 and cash inflow from operations of zero in Year 1.

The recognition of interest expense is a(n) _____ _____ transaction.

claims exchange

During Year 1, Silver Sinks, Inc. earned $33,000 of revenue on account. Cash collections of receivables were $28,000. The remainder of the receivables were collected in Year 2. As a result of these transactions, Silver Sink will report Year 1 net income of ______.

$33,000 and cash inflow from operating activities of $28,000 in Year 1 and $5,000 in Year 2

When a company pays cash to settle an account payable, ______.

both cash and accounts payable decrease

Issuing stock for cash increases ______.

cash flow from financing activities,
common stock,
stockholders' equity,
assets

Providing services on account will ______.

cause an increase in the amount of net income shown on the income statement,
cause a increase in the amount of retained earnings shown on the statement of changes in stockholders equity

Accrual accounting is ______ by generally accepted accounting principles (GAAP).

required

A deferral occurs when an expense is recognized ______ the associated cash is exchanged.

after

An economic sacrifice resulting from operating activities undertaken to generate revenue is called a(n) _____.

expense

Adjusting entries are normally prepared ______.

at the end of an accounting period before financial statements are prepared

Signing a contract to provide future services ______.

has no effect on financial statements

The total benefits, both cash and other items, received from operating the business are shown on the ______.

income statement

A deferral occurs when revenue ______.

is recognized after the associated cash has been collected

Green Company incurred $5,000 of accrued expenses during Year 1, but paid the cash associated with the payables in Year 2. Based on this information alone, under accrual accounting, the company would report a net loss of ______.

...

Net income and cash flow from operating activities will ______.

...