Financial Accounting Ch1

Sole Proprietorship

a business owned and operated by a single individual, where the owner is personally responsible for all debts and liabilities of the business. This structure allows for simplified taxation and management but also entails unlimited personal liability.

Net income, as opposed to a net loss, causes retained earnings to ______.

increase

____ are earned by selling goods or services to customers

revenue

Dividends are ______.

company profits that are paid to stockholders and not an expense incurred to generate earnings

The 4 financial statements consist of the ______ statement, the statement of _____ earnings, the ______ sheet, and the statement of _____ flows.

income, retained, balance, cash

The heading of an income statement ______.

indicates if the reported numbers are rounded to the nearest thousand or million, includes the time period covered, and includes the name of the company

True or false: Financial statements must have a year end of December 31.

false; financial statements may be prepared for any 12-month period

Liberty, Inc., a US company, sold merchandise to Belle, a French company, for 10,000 euros. In Liberty's US financial statements, this sale should be reported in ______.

US dollars, converted at the exchange rate on the transaction date