ACCT 251 - Chapter 1

A balance sheet lists the assets, ____, and stockholders' equity as of a specific date.

liabilities or liability

A net loss ______ retained earnings. a. has no effect on b. increases c. decreases

c. decreases

Profits earned by a company that have not been paid to stockholders are called ___ earnings. (Enter only one word.)

retained

Measuring business activities and reporting those measurements to external parties is the function of ______ accounting. a. financial b. managerial c. both financial and managerial

a. financial

Undistributed profits that have accumulated in the company over time are called ____ earnings. (Enter only one word.)

retained

Select all that apply The three classifications on the statement of cash flows are cash flows from (Select all that apply.) a. financing activities. b. business activities. c. investing activities. d. operating activities. e. discontinued activities.

a. financing activities. c. investing activities. d. operating activities.

The two main functions of ____ are to (1) measure business activities and (2) to communicate those measurements to investors and creditors. (Enter only one word.)

accounting or accountants

Management discussion and analysis and note disclosures to the financial statements are included in the ___ ___. (Enter one word per blank.)

annual report

Which of the following financial statements shows a firm's financial position on a particular date? a. Income statement b. Balance sheet c. Statement of stockholders' d. equity e. Statement of cash flows

b. Balance sheet

According to the conceptual framework, for accounting information to be relevant, what two qualities must it possess? a. Freedom from material error b. Consistency c. Confirmatory value d. Predictive value

c. Confirmatory value d. Predictive value

_____ Statements represent a company's primary means of communicating information to external users. (Enter one word per blank.)

financial, finance, or financing

_____ accounting deals with the concepts and methods used to provide information to an organization's internal users. (Enter only one word.)

managerial or management

The four financial statements published to provide information to external users include which of the following? a. Statement of Cash Flows b. Balance Sheet c. Statement of Stockholders' d. Equity f. Income Statement g. Statement of Assets h. Statement of Business Activities

a. Statement of Cash Flows b. Balance Sheet c. Statement of Stockholders' d. Equity f. Income Statement

Select all that apply Which of the following appear(s) on the balance sheet? a. Utilities payable b. Common stock c. Net income d. Accounts receivable e. Salaries expense

a. Utilities payable b. Common stock d. Accounts receivable

Which of these would be found on a company's balance sheet? (Select all that apply.) a. Depreciation expense b. Equipment c. Sales revenue d. Notes payable e. Accounts receivable

b. Equipment d. Notes payable e. Accounts receivable

The accounting equation is: Assets = ______ + Stockholders' Equity. a. Revenues b. Liabilities c. Expenses d. Dividends

b. Liabilities

Select all that apply Which of the following items are found on a balance sheet? (Select all that apply.) a. Dividends b. Liabilities c. Stockholders' equity d. Revenue e. Assets

b. Liabilities c. Stockholders' equity e. Assets

Salaries already paid to employees for the month is a(n) ______ account that appears on the ______. a. revenue; income statement b. revenue; balance sheet c. liability; income statement d. expense; income statement e. liability; balance sheet

d. expense; income statement

Pizza Aroma generated $11,000 in revenues and had expenses of $6,000. Pizza Aroma's net income or loss is: a. a net loss of $5,000 b. a net loss of $17,000 c. net income of $17,000 d. net income of $5,000

d. net income of $5,000

An advantage of the corporate form of organization is that a corporation a. does not have to pay its creditors. b. is not taxed. c. is not regulated. d. provides limited liability to stockholders.

d. provides limited liability to stockholders.

When a company earns net income, its retained earnings: a. are paid to stockholders b. increase c. are converted to cash d. decrease

b. increase

Predictive value and confirmatory value are components of which fundamental qualitative characteristic? a. Neutrality b. Faithful representation c. Relevance d. Completeness

c. Relevance

Select all that apply Which of the following are financial statements? (Select all that apply.) a. Statement of corporate responsibility b. Statement of stockholders' equity c. Balance sheet d. Income statement e. Statement of assets

b. Statement of stockholders' equity c. Balance sheet d. Income statement

Which of the following represents the net income earned by a corporation and not yet paid to shareholders? a. Other comprehensive income b. Additional paid-in capital c. Paid-in capital d. Retained earnings

d. Retained earnings

Match each statement to the type of information contained in the statement.

Balance sheet - Assets, liabilities, and stockholders' equity Income Statement - Revenues and expenses Statement of Cash Flows - Operating, investing, and financing activities

Correctly match the terms with the descriptive example.

Confirmatory value - Positive income is consistent with effectiveness of management. Predictive value - Consistently increasing income helps forecast the company's ability to generate future cash.

The form of business organization where an entity is legally separate from its owners and issues shares of stock is a a. partnership. b. proprietorship. c. corporation.

c. corporation.

Select all that apply An income statement reports: (Select all that apply.) a. amounts contributed by stockholders b. cash c. expenses d. net income or loss e. revenues

c. expenses d. net income or loss e. revenues

Companies communicate information about their business activities primarily through a. their tax return. b. public relations announcements. c. financial statements.

c. financial statements.

The financial statement that is most useful in explaining a company's stock price performance is the a. balance sheet. b. statement of stockholders' equity. c. income statement.

c. income statement.

Which financial statement reports revenues and expenses? a. Statement of cash flows b. Balance sheet c. Statement of stockholders' equity d. Income statement

d. Income statement

If revenues are less than expenses, a company has a. fewer assets than liabilities. b. net income. c. no liabilities. d. a net loss.

d. a net loss.

Information that best explains companies' stock price performance is reported on the ____ ____.

income statement

The financial statement that summarizes revenues and expenses for a period of time is the ____ ____ . (One word per blank)

income statement

Which of the following appear on the statement of stockholders' equity? (Select all that apply.) a. Property, plant, and equipment b. Net income c. Cash received during the d. accounting period e. Dividends f. Beginning balance of retained earnings

b. Net income e. Dividends f. Beginning balance of retained earnings

Select all that apply The four financial statements published to provide information to external users include which of the following? a. Statement of Business Activities b. Statement of Stockholders' Equity c. Balance Sheet d. Statement of Cash Flows e. Income Statement f. Statement of Assets

b. Statement of Stockholders' Equity c. Balance Sheet d. Statement of Cash Flows e. Income Statement

Select all that apply In addition to the financial statements, which of the following must be included in the annual reports? a. press releases. b. notes disclosures. c. corporate income tax returns. d. management discussion and analysis.

b. notes disclosures. d. management discussion and analysis.

The statement of cash flows classifies items as a. recurring and nonrecurring. b. operating, investing, and financing. c. current and noncurrent. d. operating and nonoperating.

b. operating, investing, and financing.

Select all that apply The two sources of stockholders' equity are amounts ______. a. borrowed from related companies b. paid in from shareholders c. earned by the corporation borrowed from banks

b. paid in from shareholders c. earned by the corporation

The financial statement that provides information about cash receipts and cash disbursements for the period is the a. income statement. b. statement of cash flows. c. statement of retained earnings. d. balance sheet.

b. statement of cash flows.

The financial statement that displays a firm's financial position on a particular date is the _____ ____. (Enter one word per blank)

balance sheet

The purpose of a statement of cash flows is to provide information about the a. assets, liabilities, and stockholders' equity used during the period. b. assets used during the period. c. income and related expenses during the period. d. cash receipts and cash disbursements during a period.

d. cash receipts and cash disbursements during a period.