Chapter 1

Which of the following activities is an example of a financing activity?

Receiving a loan from a bank.

Net income

Retained Earnings (end of yr) - Retained Earnings (beginning of yr)+ Dividends paid

A. The company's total liabilities B. The sources of cash during the period C. An opinion about whether the financial statements are fairly stated D. The amount of dividends that are distributed to the company's stockholders E. A discussion of potential new products to be introduced the next year F. Information regarding accounting methods used G. The company's total revenue for the period

A. Balance Sheet B. Statement of Cash Flows C. Auditor's Report D. Statement of Stockholders' Equity E. Management's Discussion and Analysis (MD&A) F. Notes to the Financial Statements G. Income Statement

A. Accounts receivable B. Cash received from the sale of land C. Net income D. Cash invested in the business by Flores (owner) E. Notes payable F. Supplies expense G. Land H. Supplies

A. Balance sheet B. Statement of cash flow C. Income statement + statement of stockholders' equity D. Statement of cash flow E. Balance sheet F. Income statement G. Balance sheet H. Balance sheet

A. Relatively more difficult to establish B. Business income combined with owner(s) income for income tax purposes C. Unlimited liability D. Full control E. Easier to raise funds

A. Corporation B. Sole proprietorship + partnership C. Sole proprietorship + partnership D. Sole proprietor E. Corporation

A. Investment of excess cash in the shares of another company B. Payment of employee salaries C. Repayment of a loan D. Sale of merchandise inventory E. Issuance of common stock F. Purchase of equipment to manufacture a company's products

A. Investing B. Operating C. Financing D. Operating E. Financing F. Investing

The accounting equation

Assets = Liabilities + Stockholders' Equity

The The three types of business activities in which every business, regardless of organizational form, its industry or its size, is involved are:

Financing activities, operating activities, investing activities

Change in Assets

Change in Assets= Change in Liability + Change in Stockholders' Equity

Change in Stockholder's Equity

Change in Stockholder's Equity = Revenue - Expenses

Dividends Formula

Dividends= Beginning retained earnings + net income-Ending retained earnings

The qualitative characteristics of accounting information known as comparability means that the same accounting methods should be used from one period to the next, whenever possible.

False

The statement of cash flows reports information about cash flows in two categories: cash received and cash disbursed.

False

Stockholder equity equation

Stockholders' Equity= assets - liabilities

Which of the following is not part of the standard heading of a financial statement?

The company's industry *Each financial statement identifies the company, the statement title, and the date or time period of the statement.

Retained Earnings

Total assets - accounts payable - common stock

The goal of the Sarbanes-Oxley Act of 2002 was to increase the level of confidence that external users have in a company's financial statements.

True