ACC 220 Chapter 1

Profits earned by a company that have not been paid to stockholders are called

Retained earnings

is the amount recorded as a result of the sale of products or services to customers.

Revenue

Ending retained earnings is calculated as

beginning retained earnings + net income - dividends

Stockholders' equity arises primarily from amounts invested by shareholders and amounts ______.

earned by the corporation

True or false: The fundamental activities of a business are selling activities and marketing activities.

false

Selling stock to an investor is a

financing activity

Net income equals:

revenues minus expenses

Revenues are:

sales of goods or services to customers

For a corporation, the owners' claims to the resources of a company are called

stockholders' equity.

Expenses are:

the costs of doing business that are necessary to produce revenue

Stockholders' equity is

the owners' claims to resources of the corporation.

Retained earnings represents

the total net income earned over the life of the company that has not been distributed as dividends.

Which of the following items are assets?

1. Equipment 2. Supplies

In financial accounting which of the following are the three types of business activities of a company?

1. Financing activities 2. Investing activities 3. Operating activities

The four financial statements published to provide information to external users include which of the following?

1. Income Statement 2. Statement of Stockholders' Equity 3. Balance Sheet 4. Statement of Cash Flows

The two primary functions of financial accounting are to:

1. Measure business activity 2. Communicate measurements to external parties

Which of the following are operating activities?

1. Paying salaries to employees 2. Providing services to customers 3. Paying advertising expenses

The accumulated net income earned since the inception of the corporation and not yet paid to shareholders is referred to as

1. Retained 2. Earnings

Identify the three most common forms of business organization.

1. Sole Proprietorship 2. Partnership 3. Corporation

Which of the following are financial statements?

1. Statement of stockholders' equity 2. Income statement 3. Balance sheet

The two sources of stockholders' equity are amounts ______.

1. earned by the corporation 2. paid in from shareholders

In our society, the two main functions of accounting are to

1. measure business activities. 2. communicate information to investors and creditors.

The system that maintains records of a company's operations and then communicates that information to decision makers is referred to as

Accounting

Resources owned by a company are called

Assets

The financial statement that displays a firm's financial position on a particular date is the

Balance Sheet

Which of the following financial statements shows a firm's financial position on a particular date?

Balance sheet

Which of the following lends money to a company and expects the company to repay the debt?

Creditor

A(n) ______ is a cost of doing business that is necessary to produce ___. Multiple choice question.

Expense & revenue

Companies communicate information about their business activities primarily through

Financial statements

Borrowing from a bank is a

Financing Activity

Information that best explains companies' stock price performance is reported in the

Income Statement

The financial statement that is most useful in explaining a company's stock price performance is the

Income Statement

The financial statement that summarizes revenues and expenses for a period of time is the

Income Statement

Which financial statement reports revenues and expenses?

Income statement

activities involve the buying and selling of land, buildings, and equipment used in the business.

Investing

Creditor

Lends money to the company

Any amount owed to a creditor is classified in the balance sheet as a

Liability

accounting deals with the concepts and methods used to provide information to an organization's internal users.

Managerial

Revenues minus expenses equals

Net Income

activities involve purchasing goods from suppliers, designing and manufacturing products, and selling products to customers.

Operating

Investors

Own stock in the company

Which of the following is an investing activity?

Paying cash to buy equipment