ACCY 200 SB Ch2

An entity's financial position at the end of a reporting period is reported on the:

balance sheet

The four concepts/principles that relate to the financial statements are:

consistency, full disclosure, materiality, and conservatism

The ____ ____ concept requires that the financial statements and notes include all necessary information to prevent a reasonably astute user of the financial statements from being misled.

full disclosure

Most assets are reported on the balance sheet based on their:

original (historical) cost

The investments by and distributions to owners during a reporting period are reported on the:

statement of stockholders' equity

If the total liabilities is equal to $8,000 and the total stockholders' equity is equal to $4,000, then:

the total assets is equal to $12,000

The three concepts/principles that relate to transactions are:

unit of measurement, cost principle, and objectivity

Which of the following items are normally included as key components of a corporation's annual report?

-The report of the external auditor's examination of the financial statements -A five-year (or longer) summary of key financial data -The notes to the financial statements

A = L + SE is called the

accounting equation

The period of time selected for reporting financial statements is known as the

accounting period

Financial statements that show a column for the current year and the prior year are known as ___ financial statements

comparative

The ___ concept does not mean that revenue and expense for a reporting period are equal.

matching

Accrual accounting results in:

recognition of revenues when they are earned (at the point of sale) and recognition of expenses when they are incurred

In the horizontal model representation of the financial statements, the arrow going from net income to stockholders' equity means that net income affects the _____ _____ account within stockholders' equity.

retained earnings

In the horizontal model representation of the financial statements, _____.

the arrow pointing from net income to stockholders' equity indicates that net income affects retained earnings

A firm prepares comparative financial statement so that _____.

the users of the data can easily spot changes in the firm's financial position and in its results of operations

In the United States, the dollar is the ____ of _____ for all transactions

unit of measurement

If the total assets is equal to $10,000, and the total stockholders' equity is equal to $3,000, then:

the total liabilities is equal to $7,000

Which of the following statements are true regarding the matching concept?

-Revenues are recorded in the period in which they are earned. -Expenses are recorded in the period in which they are incurred.

Which of the following is true regarding the balance sheet components?

Liabilities are the obligations of the organization.

____ means that absolute exactness is not necessary in the amounts shown in the financial statements.

Materiality

Which of the following are the required financial statements under generally accepted accounting principles and auditing standards?

-Income statement -Statement of cash flows -Balance sheet -Statement of changes in stockholders' equity

Which of the following items are normally included as key components of a corporation's annual report?

-Management's discussion and analysis of the financial statements -Highlights for the year, including net revenues, diluted earnings per share, and return of stockholders' equity -The reporting firm's financial statements for the year

Providing more (rather than less) detail in the notes to the financial statements is driven by which of the following concepts/principles?

Full disclosure