Acct 1040

If total assets of Hercules Manufacturing, Inc. are $556,000, Retained Earnings at December 31, 2018, must be:

$221,000 A/P($12,000) + N/P($135,000) + Capital Stock($188,000) + R.E.(?) = $556,000 Retained Earnings = $221,000

If total assets equal $345,000 and total owners' equity equal $120,000, then total liabilities must equal:

$225,000.

What amount of net income will be reported on an income statement for the month of August?

$33,500 − $26,000 = $7,500

At the end of the current year, the owners' equity in Durante Co. is $360,000. During the year, the assets of the business had increased by $68,000 and the liabilities had increased by $118,000. Owners' equity at the beginning of the year must have been:

$410,000. $68,000 − $118,000 = ($50,000) $360,000 − ($50,000) = $410,000

If Capital Stock is $260,000, what is the December 31, 2018 cash balance?

$46,000 A/P($16,000) + N/P($190,000) + Capital Stock($260,000) + R.E.($160,000) = $626,000 Cash(?) + A/R($40,000) + Land($240,000) + Building($180,000) + Equipment($120,000) = $626,000 Cash = $46,000

The principle of adequate disclosure means that a company should disclose:

Any financial facts that a reasonably informed person would consider necessary for the proper interpretation of the financial statements.

Financial statements may be prepared for which time period?

Any time period.

Generally accepted accounting principles are intended to assist accountants in preparing financial statements that:

Are relevant, verifiable, comparable, and understandable.

The accounting systems of most business organizations:

Are tailored to meet the organization's needs for accounting information and the resources available for operating the system.

If during the current year, liabilities of Hayden Travel decreased by $50,000 and owners' equity increased by $75,000, then:

Assets increased during the year by $25,000.

In comparison with a financial statement prepared in conformity with generally accepted accounting principles, a management accounting report is more likely to:

Be tailored to the specific needs of an individual decision maker.

The procedural aspect of accounting that involves keeping detailed records of business transactions, much of which is done today by computers.

Bookkeeping

Which of the following is not a user of internal accounting information?

Creditor

Capital stock represents:

The amount invested in the business by stockholders when shares of stock were initially issued by a corporation.

Which financial statement is prepared as of a specific date?

The balance sheet

Which financial statement is primarily concerned with reporting the financial position of a business at a particular time?

The balance sheet.

Retained earnings is:

The owners' equity that has accumulated as a result of profitable operations.

Which of the following is not a generally accepted accounting principle relating to the valuation of assets?

The safety principle - assets are valued at no more than the value for which they are insured.

Which of the following is not an objective of generally accepted accounting principles?

To minimize the amount of income taxes owed.

Articulation between the financial statements means that they relate closely to each other on the basis of the same underlying transaction information.

True

Management accounting information is oriented toward the future while financial accounting information is historical in nature.

True

Notes payable and accounts payable both require a company to pay an amount owed by a certain date. Notes payable generally have interest, while accounts payable generally do not.

True

One purpose of generally accepted accounting principles is to make accounting information prepared by different companies more comparable.

True

The objectives of an accounting system include all of the following, except:

Dictate the specific types of business transactions the enterprise may pursue.

Decreases in owners' equity are caused by:

Distributions of assets to the owners and unprofitable operations.

Owners' equity in a business increases as a result of which of the following?

Earnings from profitable operation of the business.

Which of the following is generally not considered an external user of accounting information?

Factory managers.

If a company purchases equipment with cash, its total assets will increase.

False

Management accounting refers to the preparation and use of accounting information designed to meet the needs of decision makers outside the business organization.

False

The content of management accounting reports needs to be presented in conformity with generally accepted accounting principles.

False

The tailoring of an accounting report to meet the needs of a specific decision maker is more characteristic of financial accounting reports than of management accounting reports.

False

Total assets plus total liabilities must equal total owners' equity.

False

The area of accounting that refers to providing information to support external investment and credit decisions.

Financial Accounting

A broad term that describes all information provided to external users, including but not limited to financial statements.

Financial Reporting

Statement of financial position (balance sheet), income statement, statement of cash flows.

Financial Statement

Generally accepted accounting principles are the "ground rules" used in the preparation of:

Financial statements.

The set of standards, assumptions, and concepts that form the "ground rules" for financial reporting in the United States is termed

Generally accepted accounting principles.

The fact that the same information is provided to various external users, including investors and creditors.

Gerneral-Purpose Information

An important quality of accounting information that allows investors, creditors, management, and other users to rely on the information.

Integrity

Procedures and processes within an organization that ensure the integrity of accounting information.

Internal Control

Although accounting information is used by a wide variety of external parties, financial reporting is primarily directed toward the informational needs of:

Investors and creditors.

Which of the following is a characteristic of financial accounting information?

Its preparation requires judgment.

The area of accounting that refers to providing information to support internal management decisions.

Management Accounting

An expense is best defined as:

Past, present, or future payments of cash required to generate revenues.

The segment of the accounting profession that relates to providing audit, tax, and consulting services to clients.

Public Accounting

A balance sheet:

Shows the assets, liabilities, and owners' equity of a business entity, valued in conformity with generally accepted accounting principles.

Which one of the following is not considered as one of the three primary financial statements?

Statement of budgeting activities.

Which of the following statements is considered a "snapshot" of the business in financial or dollar terms?

Statement of financial position.