PR_CH 1
Which of the following aspects relate to the information provided in an income statement?
Ability to earn a profit from its operations during the current period
The system that maintains records of a company's operations and then communicates that information to decision makers is referred to as __________________.
Accounting
Which of the following appear on the statement of stockholders' equity?
Beginning balance of retained earnings Net income Dividends
_______________________ Statements represent a company's primary means of communicating information to external users.
Financial
A balance sheet lists the assets,________________________, , and stockholders' equity as of a specific date.
Liabilities
The accounting equation is: Assets = ______ + Stockholders' Equity.
Liabilities
Which qualitative characteristic requires that financial information should not influence decision making to achieve a predetermined result?
Neutrality
Which of these would be found on a company's balance sheet? (Select all that apply.) Notes payable Sales revenue Equipment Accounts receivable Depreciation expense
Notes payable Equipment Accounts receivable
Identify the three most common forms of business organization.
Partnership Sole proprietorship Corporation
Which items are found on an income statement?
Revenues Expenses
Financial information that is immaterial in amount or nature need not be reported under GAAP. True false question. True
True
The two main functions of _____________________are to (1) measure business activities and (2) to communicate those measurements to investors and creditors.
accounting
A net loss ______ retained earnings.
decreases
To be useful for decision making, information should possess the fundamental qualities of relevance and _____________________ representation.
faithful
To be useful for decision making, information should possess the fundamental qualities of relevance and________________ representation.
faithful
The primary functions of accounting are to:
measure a company's activities. communicate information to decision makers.
The hierarchy of qualitative characteristics of financial information require that, in order to be useful for decision making, information should possess the fundamental characteristics of
relevance and faithful representation.
The purpose of an income statement is to:
summarize the profit-generating activities that occurred during a particular reporting period
The statement of cash flows classifies items as
operating, investing, and financing.
The private sector organization that is currently responsible for setting accounting standards in the United States is the
Financial Accounting Standards Board.
The financial statement that displays a firm's financial position on a particular date is the
Balance Sheet
The four financial statements published to provide information to external users include which of the following?
Balance Sheet Income Statement Statement of cash flow Statement of Stockholders' Equity
Which of the following financial statements shows a firm's financial position on a particular date?
Balance sheet
________________ Is the common abbreviation for the Board that currently establishes financial accounting and reporting standards in the U.S.
FASB
Faithful representation requires information to have which of the following three characteristics?
Free from material error Neutrality Completeness
The financial statement that summarizes revenues and expenses for a period of time is the ______________ ________________.
Income Statement
Information that best explains companies' stock price performance is reported on the _____________ ______________ .
Income statement
Predictive value and confirmatory value are components of which fundamental qualitative characteristic?
Relevance
The two sources of stockholders' equity are amounts ______.
earned by the corporation paid in from shareholders
A code or moral system that provides criteria for evaluating right and wrong is referred to as
ethics
Salaries already paid to employees for the month is a(n) ______ account that appears on the ______.
expense; income statement
Faithful representation requires that information is complete, neutral, and
free from material error.
Financial information that may impact investors' and creditors' decisions is referred to as _________________________ and must be reported under GAAP
material
The impact of financial accounting information on investors' and creditors' decisions is closely related to the concept of:
predictive value
The financial statement that provides information about cash receipts and cash disbursements for the period is the
statement of cash flows.
The three most common forms of business organization are sole proprietorship, ___________________, and _____________________.
partnership corporation
Retained earnings represents
the total net income earned over the life of the company that has not been distributed as dividends.
The form of business organization where an entity is legally separate from its owners and issues shares of stock is a
corporation.
A business organization that is legally separate from its owners is called a(n)_____________________________ .
Corporation
Profits earned by a company that have not been paid to stockholders are called
retained earnings
Companies communicate information about their business activities primarily through
financial statements.
The financial statement that is most useful in explaining a company's stock price performance is the
income statement.
Which of these would be found on a company's balance sheet?
Equipment Notes payable Accounts receivable
is a term that refers to a code or moral system that provides criteria for evaluating right or wrong.
Ethics
According to the conceptual framework, for accounting information to be relevant, what two qualities must it possess?
Predictive value Confirmatory value
Management discussion and analysis and note disclosures to the financial statements are included in the
annual report or 10 K
The purpose of a statement of cash flows is to provide information about the
cash receipts and cash disbursements during a period.
The characteristic that a new accounting standard should not favor one group of companies over others or achieve a particular social outcome is an example of
neutrality
In addition to the financial statements, which of the following must be included in the annual reports?
notes disclosures. management discussion and analysis.
The three classifications on the statement of cash flows are cash flows from
operating activities. financing activities. investing activities.
The accumulated net income earned since the inception of the corporation and not yet paid to shareholders is referred to as _________________________ ___________________________ .
retained earnings