Terms and Definitions

The - Select your answer -accounting statementsbudgetsfinancial statementsuser reportsCorrect 1 of Item 1 are accounting reports that summarize business transactions for users.

Match each description with the proper financial statement and select the proper dating for each.

Financial Statement	Description	Dating
- Select your answer -Balance sheetIncome statementStatement of cash flowsStatement of retained earningsCorrect 2 of Item 1	A summary of revenue and expenses	- Select your answer -Period of timeSpecific dateNo datingCorrect 3 of Item 1
- Select your answer -Balance sheetIncome statementStatement of cash flowsStatement of retained earningsCorrect 4 of Item 1	A summary of changes in the retained earnings	- Select your answer -Period of timeSpecific dateNo datingCorrect 5 of Item 1
- Select your answer -Balance sheetIncome statementStatement of cash flowsStatement of retained earningsCorrect 6 of Item 1	A list of assets, liabilities, and retained earnings	- Select your answer -Period of timeSpecific dateNo datingCorrect 7 of Item 1
- Select your answer -Balance sheetIncome statementStatement of cash flowsStatement of retained earningsCorrect 8 of Item 1	A summary of the cash receipts and cash payments	- Select your answer -Period of timeSpecific dateNo datingCorrect 9 of Item 1

The excess of revenue over expense is called - Select your answer -net incomenet losstotal assetsretained earningsCorrect 10 of Item 1.

Understanding the Business Transaction

On August 1, 2014, Hayes and Associates started its consulting business. The following are business transactions for August:

Aug. 1	Hayes and Associates issued capital stock for $32,000 cash.
Aug. 9	Hayes and Associates provided $7,800 of consulting services to a local business for cash. The value of the service provided is called - Select your answer -fees earnedprepaid expenserent revenuesalary expenseCorrect 1 of Item 2. If the customer does not pay cash but promises to pay at a later date, the amount owed to Hayes and Associates by the customer is termed - Select your answer -accounts payableaccounts receivablefees earnedprepaid expenseCorrect 2 of Item 2.
Aug. 15	Hayes and Associates paid $24,200 for the purchase of land for a future office site.
Aug. 30	Hayes and Associates spent cash and used other assets in earning revenue. Cash was spent on wages, $3,000; rent $1,300; and utilities, $270. These are called - Select your answer -accounts payableexpensesfees earnedprepaid expensesCorrect 3 of Item 2.
Aug. 30	Hayes and Associates paid a cash dividend of $6,460.

For each transaction in the previous section, enter the appropriate dollar amount in the appropriate column. If the amount reduces a balance, then enter the amount as a negative number using a minus sign. When finished, total the columns to determine the August 31, 2014 balance of each column.

	Assets			=	Stockholders' Equity
Transaction No.	Cash	+	Land	=	Capital Stock		Dividends	+	Fees Earned		Wages Exp.		Rent Exp.		Utilities Exp.
Balance, Aug. 1, 2014	0		0		0		0		0		0		0		0
Aug. 1, 2014
Aug. 9, 2014
Aug. 15, 2014
Aug. 30, 2014
Aug. 30, 2014
Balance, Aug. 31, 2014

Financial Statement Impact

On April 1, 2014, Cates Consulting issued capital stock for $25,000 cash and started its consulting business. Cates Consulting provided consulting services to a business on April 16, 2014 and received cash for the fees earned on that date. On April 30, 2014 Cates Consulting spent cash on wages, $4,500; rent $2,200; and utilities, $500. On April 30, 2014 Cates Consulting paid a cash dividend. The amount of fees earned on April 16, 2014 can be changed using the following slider to see the impact on the financial statements. Likewise, the amount of the dividend can be changed using the following slider to see the impact on the financial statements.

Answer the following questions using sliders and the dynamic financial statements.

1.	Is Cates Consulting profitable under all the possible slider scenarios?
	- Select your answer -YesNoCorrect 1 of Item 4

2.	What is net income if Fees Earned is $20,000 and there were no dividends?
	$

3.	How much does total stockholders' equity decrease if Fees Earned is reduced from $20,000 to $18,000 and Dividends are $8,000 rather than $0?
	$

4.	If Fees Earned and Dividends both increase by $2,000, total liabilities and stockholders equity - Select your answer -increasesdecreasesremains the sameCorrect 4 of Item 4.

5.	What is the cash balance on April 30, 2014 if Fees Earned is $22,000 and Dividends is $2,000?
	$

6.	What combination of slider positions (Fees Earned and Dividends) produces the greatest stockholders' equity balance on April 30, 2014?
	- Select your answer -$16,000,$0$22,000,$0$16,000,$8,000$22,000,$8,000Correct 6 of Item 4