Test 1

The adjusted trial balance on December 31 of the Zebra Company contained the following accounts and balances: Cash $ 500 Land $ 600 Service Revenue $4,500 Accounts Receivable 560 Prepaid Rent 700 Notes Payable 1,000 Supplies 250 Dividends 200 Accounts Payable 250 Unearned Revenue 500 Based on the above information only, what amount would be reported on the balance sheet for Total Assets? $ 6,700 $ 1,250 $ 2,610 $1,100

$ 2,610

[The following information applies to the questions displayed below.] Packard Company engaged in the following transactions during 2015, its first year in operations: (Assume all transactions are cash transactions.) 1) Acquired $1,400 cash from the issue of common stock. 2) Borrowed $870 from a bank. 3) Earned $1,050 of revenues. 4) Paid expenses of $340. 5) Paid a $140 dividend. During 2016, Packard engaged in the following transactions: (Assume all transactions are cash transactions.) 1) Issued an additional $775 of common stock. 2) Repaid $535 of its debt to the bank. 3) Earned revenues of $1,200. 4) Incurred expenses of $540. 5) Paid dividends of $190. The total in Packard's retained earnings account before closing in 2015 is $0. $570. $710. $730.

$0 Retained Earnings in the first year of operations is zero until revenues, expenses and dividends are closed to retained earnings.

[The following information applies to the questions displayed below.] Packard Company engaged in the following transactions during 2015, its first year in operations: (Assume all transactions are cash transactions.) 1) Acquired $1,400 cash from the issue of common stock. 2) Borrowed $870 from a bank. 3) Earned $1,050 of revenues. 4) Paid expenses of $340. 5) Paid a $140 dividend. During 2016, Packard engaged in the following transactions: (Assume all transactions are cash transactions.) 1) Issued an additional $775 of common stock. 2) Repaid $535 of its debt to the bank. 3) Earned revenues of $1,200. 4) Incurred expenses of $540. 5) Paid dividends of $190. The amount of retained earnings on Packard's 2016 balance sheet is $1,635. $1,230. $1,040. $1,520.

$1,040. $570 beg. balance + $1,200 revenue - $540 expenses - $190 dividends = $1,040

[The following information applies to the questions displayed below.] Nelson Company experienced the following transactions during 2016, its first year in operation. 1. Issued $10,000 of common stock to stockholders. 2. Provided $6,300 of services on account. 3. Paid $2,600 cash for operating expenses. 4. Collected $3,900 of cash from accounts receivable. 5. Paid a $300 cash dividend to stockholders. The amount of net cash flow from operating activities shown on Nelson Company's 2016 statement of cash flows is $3,700. $3,400. $1,300. $1,000.

$1,300. $3,900 cash collected from revenue - $2,600 cash paid for expenses = $1,300 cash flow from operating activities

The following accounts and balances were drawn from the records of Carolina Company on December 31, 2016: Cash $4,000 Accounts receivable $ 3,400 Dividends 2,000 Common stock 3,900 Lands 3,200 Revenue 3,200 Accounts payable 1,800 Expense 2,200 Total assets on Carolina's December 31, 2016 balance sheet would amount to: $12,600. $13,800. $7,200. $10,600.

$10,600. $4,000 cash + $3,200 land + $3,400 accounts receivable = $10,600 total assets

[The following information applies to the questions displayed below.] Nelson Company experienced the following transactions during 2016, its first year in operation. 1. Issued $10,000 of common stock to stockholders. 2. Provided $6,300 of services on account. 3. Paid $2,600 cash for operating expenses. 4. Collected $3,900 of cash from accounts receivable. 5. Paid a $300 cash dividend to stockholders. The total amount of assets shown on Nelson Company's December 31, 2016 balance sheet is: $11,000. $13,400. $13,700. $11,600. Cash ($10,000 + $3,900 - $2,600 - $300) + Accounts Receivable ($6,300 - $3,900) = $13,400 Total Assets

$13,400. Cash ($10,000 + $3,900 - $2,600 - $300) + Accounts Receivable ($6,300 - $3,900) = $13,400 Total Assets

[The following information applies to the questions displayed below.] Packard Company engaged in the following transactions during 2015, its first year in operations: (Assume all transactions are cash transactions.) 1) Acquired $1,400 cash from the issue of common stock. 2) Borrowed $870 from a bank. 3) Earned $1,050 of revenues. 4) Paid expenses of $340. 5) Paid a $140 dividend. During 2016, Packard engaged in the following transactions: (Assume all transactions are cash transactions.) 1) Issued an additional $775 of common stock. 2) Repaid $535 of its debt to the bank. 3) Earned revenues of $1,200. 4) Incurred expenses of $540. 5) Paid dividends of $190. The amount of total equity on Packard's 2015 balance sheet is $570. $2,110. $1,260. $1,970.

$1970 $0 beg. balance + $1,400 common stock issued + $1,050 revenue - $340 expenses - $140 dividend= $1,970

At the end of 2016, retained earnings for the Baker Company was $2,750. Revenue earned by the company in 2016 was $3,000, expenses paid during the period were $1,600, and dividends paid during the period were $1,000. Based on this information alone, retained earnings at the beginning of 2016 was $1,350. $6,000. $3,150. $2,350.

$2,350. Beginning Retained Earnings + Revenue - Expenses - Dividends = Ending Retained Earnings Beginning Retained Earnings + $3,000 - $1,600 - $1,000 = $2,750 Beginning Retained Earnings = $2,350

Revenue on account amounted to $3,000. Cash collections of accounts receivable amounted to $2,700. Cash paid for expenses amounted to $2,500. Cash flow from operating activities is: $200. $300. $500. None of the above.

$200

[The following information applies to the questions displayed below.] Nelson Company experienced the following transactions during 2016, its first year in operation. 1. Issued $10,000 of common stock to stockholders. 2. Provided $6,300 of services on account. 3. Paid $2,600 cash for operating expenses. 4. Collected $3,900 of cash from accounts receivable. 5. Paid a $300 cash dividend to stockholders. The amount of retained earnings appearing on Nelson Company's December 31, 2016 balance sheet is: $3,700. $2,700. $13,400. $3,400.

$3,400. $13,400 Assets - $10,000 Common Stock = $3,400 Retained Earnings

[The following information applies to the questions displayed below.] Nelson Company experienced the following transactions during 2016, its first year in operation. 1. Issued $10,000 of common stock to stockholders. 2. Provided $6,300 of services on account. 3. Paid $2,600 cash for operating expenses. 4. Collected $3,900 of cash from accounts receivable. 5. Paid a $300 cash dividend to stockholders. The amount of net income recognized on Nelson Company's 2016 income statement is: $2,700. $3,700. $3,400. $2,400.

$3,700. $6,300 revenue - $2,600 expenses = $3,700 net income

[The following information applies to the questions displayed below.] Packard Company engaged in the following transactions during 2015, its first year in operations: (Assume all transactions are cash transactions.) 1) Acquired $1,400 cash from the issue of common stock. 2) Borrowed $870 from a bank. 3) Earned $1,050 of revenues. 4) Paid expenses of $340. 5) Paid a $140 dividend. During 2016, Packard engaged in the following transactions: (Assume all transactions are cash transactions.) 1) Issued an additional $775 of common stock. 2) Repaid $535 of its debt to the bank. 3) Earned revenues of $1,200. 4) Incurred expenses of $540. 5) Paid dividends of $190. The amount of assets on Packard's 2016 balance sheet is $710. $3,550. $3,740. $660.

$3550 Beginning balance = Common stock + Debt + Revenues - Expenses - Dividend $2,840 = $1,400 +$870 + $1,050 - $340 - $140 Beginning balance + Common stock - Debt + Revenues - Expenses - Dividend $2,840 beg. balance + $775 - $535 + $1,200 - $540 - $190 = $3,550

[The following information applies to the questions displayed below.] Packard Company engaged in the following transactions during 2015, its first year in operations: (Assume all transactions are cash transactions.) 1) Acquired $1,400 cash from the issue of common stock. 2) Borrowed $870 from a bank. 3) Earned $1,050 of revenues. 4) Paid expenses of $340. 5) Paid a $140 dividend. During 2016, Packard engaged in the following transactions: (Assume all transactions are cash transactions.) 1) Issued an additional $775 of common stock. 2) Repaid $535 of its debt to the bank. 3) Earned revenues of $1,200. 4) Incurred expenses of $540. 5) Paid dividends of $190. The net cash inflow from operating activities on Packard's 2015 statement of cash flows is $775. $710. $1,450. $585.

$710 $1,050 inflow from revenue - $340 outflow for expenses = $710 inflow

As of December 31, 2016, Bristol Company had $100,000 of assets, $40,000 of liabilities and $25,000 of retained earnings. What percentage of Bristol's assets were obtained through investors? 60% 25% 40% 35%

35% If assets total $100,000, claims must also total $100,000. Claims include liabilities, common stock and retained earnings. Because liabilities and retained earnings equal $65,000, common stock must be $35,000. The common stock account represents the assets that were obtained through investors. $35,000 is 35% of $100,000

Which of the following is an accurate definition of the term asset? An obligation to creditors A resource that will be used to produce revenue A transfer of wealth from the business to its owners A sacrifice incurred from operating the business

A resource that will be used to produce revenue Assets are resources that a business uses to conduct is operations. Examples include cash, inventory, equipment, building, land, etc. In the process of conducting operations a business uses some assets in order to produce greater quantities of other assets. For example, Walmart may use (sell) some of its inventory in order to receive cash from a customer. The cash received is revenue. In this case, the remaining inventory is a resource (asset) that will be used (sold) in the future to produce revenue.

Liabilities represent obligations to repay debts. may increase when assets increase. have priority in business liquidations. All of the answers are qualities of liabilities.

All of the answers are qualities of liabilities. When a business borrows money from creditors is accepts an obligation (liability) to repay the money to the creditor in the future. Borrowing the money causes the business' assets and its liabilities to increase. The obligation to the creditor has priority over the business' commitments to its investors. For example, assume a business is liquidated and there is not enough money to settle its obligations to creditors and its commitments to stockholders. In this case the creditors get their portion of the assets first and what is left over is then distributed to the investors.

Which of the following is not a source of assets? Creditors Investors Operations All of the answers represent sources of assets.

All of the answers represent sources of assets. Businesses obtain assets from three sources. Specifically, businesses can borrow assets from creditors, acquire them from investors (owners), or generate them through operations.

Which of the following is a true statement? A cash revenue is an economic benefit that will cause assets and retained earnings to increase. A cash expense is an economic sacrifice that will cause assets and retained earnings to decrease. A cash dividend is a transfer of assets from a business to its owners that will cause the assets and retained earnings of the business to decrease. All of the answers represent true statements.

All of the answers represent true statements. The answer is self-explanatory.

Recognition of revenue may be accompanied by which of the following? A decrease in a liability. An increase in a liability. An increase in an asset. An increase in an asset or a decrease in a liability.

An increase in an asset or a decrease in a liability. Recognizing revenue may be accompanied by either an increase in assets (cash or accounts receivable) or a decrease in liabilities (unearned revenue).

Which of the following is an accurate depiction of the accounting equation? Assets = Liabilities + Common Stock + Retained Earnings Assets = Liabilities + Common Stock - Expenses Assets = Liabilities + Retained Earnings - Dividends Assets = Liabilities + Common Stock + Dividends

Assets = Liabilities + Common Stock + Retained Earnings The accounting equation shows the equality between a company's assets and the sources of those assets. The sources include liabilities, common stock and retained earnings. Therefore, Assets = Liabilities + Common Stock + Retained Earnings

Juarez Company acquired $1,000 cash from the issue of common stock. Which of the following shows how this event will affect the company's accounting equation? The letters "NA" indicate that the component of the equation is not affected. Assets=Liabilities + Common Stock + Retained Earnings $1,000 = $400 + $400 + $400 Assets = Liabilities + Common Stock + Retained Earnings $1,000 = $1,000 + NA + NA Assets = Liabilities + Common Stock + Retained Earnings $1,000 = NA + $1,000 + NA Assets = Liabilities + Common Stock + Retained Earnings $1,000 = NA + $600 + $600

Assets = Liabilities + Common Stock + Retained Earnings $1,000 = NA + $1,000 + NA Acquiring cash through the issue of common stock is an asset source event. The event would cause the Cash (asset) account and the Common Stock account to increase.

During 2016, Millstone Company earned $6,500 of cash revenue, paid cash dividends of $1,000 to owners and paid $4,000 for cash expenses. Liabilities were unchanged. Which of the following accurately describes the effect of these events on the elements of the company's financial statements? Assets increased by $6,500. Assets increased by $1,500. Equity increased by $2,500. Assets increased by $5,500.

Assets increased by $1,500. Revenue - Expenses - Dividends = Change in Equity $6,500 - $4,000 - $1,000 = $1,500 change in equity. If there was no change in liabilities, the change in assets must also equal $1,500.

Daemon Company paid cash to purchase land. Which of the following shows how this event will affect the company's accounting equation? The letters "NA" indicate that the component of the equation is not affected.

Assets=Liabilities+Common Stock+Retained Earning - + NA NA NA Paying cash to purchase land is an asset exchange event. The event would cause one asset account (Cash) to decrease and another asset account (Land) to increase

Fen Company paid a $300 cash dividend. Which of the following shows how this event will affect the company's accounting equation? The letters "NA" indicate that the component of the equation is not affected.

Assets=Liabilities+Common Stock+RetainedEarning ($300) = NA + NA + ($300) A dividend is a distribution of assets obtained through earnings. In other words, it is a transfer of assets from the business to its owners. It is an asset use event. The event causes the Cash (asset) account decrease and the Retained Earnings account to decrease.

The amount of accounts receivable appears on which of the following statements? Income Statement Balance Sheet Statement of Cash Flows None of the Above

Balance Sheet

The amount of unearned revenue is shown on the: Income Statement Balance Sheet Statement of Cash Flows Statement of Changes in Stockholder's Equity

Balance Sheet

Which of the following illustrates receiving cash as an advance payment for future services?

Balance Sheet Income Statement Statement of Assets = Liab.+Equity/Rev.-Exp.=Net Inc. Cash Flow + = + na / na na na + OA

Which of the following illustrates purchasing supplies on account?

Balance Sheet Income Statement Statement of Assets = Liab.+Equity/Rev.-Exp.=Net Inc. Cash Flow + = + na / na na na na

Which of the following illustrates the recognition of revenue earned on account?

Balance Sheet Income Statement Statement of Assets = Liab.+Equity/Rev.-Exp.=Net Inc. Cash Flow + = NA +/ + - = + NA

Which of the following illustrates the recognition of accrued salary expense?

Balance Sheet Income Statement Statement of Assets = Liab.+Equity/Rev.-Exp.=Net Inc. Cash Flow na = + - / na + = - na

Which of the following items would appear in the financing activities section of the cash flow statement? Cash outflow for the purchase of supplies. Cash inflow from sales revenue. Cash inflow from issuance of common stock Cash outflow for the purchase of computer equipment.

Cash inflow from issuance of common stock

Which of the following would be included in the "cash flow from operating activities" section of the statement of cash flows? Accrual of salary expense at year-end. Cash received for consulting services provided to customers Payments of cash dividends to the owners of the business. Purchase of land with cash.

Cash received for consulting services provided to customers

Salary expense appears in the: Liabilities section of the statement of stockholders' equity. Financing activities section of the statement of cash flows. Asset section of the balance sheet. Expense section of the income statement

Expense section of the income statement

The Dalen Company paid $3,500 for a one year insurance policy on July 1, 2015. The amount of expense shown on the income statement and the amount of cash outflow from operating activities shown of the statement of cash flows at the end of 2015 would be: Income Statement Statement of Cash Flows $3,500 $3,500 Income Statement Statement of Cash Flows $1,750 $1,750 Income Statement Statement of Cash Flows $1,750 $3,500 Income Statement Statement of Cash Flows $0 $1,750

Income Statement Statement of Cash Flows $1,750 $3,500

Which of the following choices accurately reflects how the recording of accrued salary expense would affect the financial statements? Increase assets and increase liabilities Decrease assets and increase liabilities and stockholders equity Increase liabilities and decrease stockholders equity Increase expense and decrease cash flow

Increase liabilities and decrease stockholders equity

If a company purchases supplies on account, this transaction would result in: Total assets decreasing. Liabilities increasing Equity decreasing. Contributed capital increasing.

Liabilities increasing

Which of the following could represent the effects of an asset exchange transaction on a company's financial statements? Assets=Liab.+Equity Rev. - Exp. = Net Inc. Cash Flow A. +- = NA + NA NA - NA = NA -IA B. +- = + + NA NA - + = + NA C. - = NA + - NA - NA = NA -OA D. None of these could represent the effects of an asset exchange transaction. Option A option B Option c option d

Option A An asset exchange transaction increases one asset and decreases another, so it does not affect total assets, liabilities or equity. It does not affect the income statement, and can be reported as a cash inflow or outflow on the statement of cash flow as either an operating or an investing activity.

Morrison Company experienced a business event that had the following effect on its accounting equation. Assets = Liabilities + Common Stock + Retained Earnings (25,000) = (25,000) + n/a + n/a Which of the events would have caused this effect? Paid off debt Issued common stock for cash Incurred cash expense Paid a cash dividend

Paid off debt The decrease in assets indicates that assets have been used. The decrease in liabilities indicates that the assets were used to pay off debt

Paul Savage purchased a restaurant named Burger Haven from Larry Jones. The purchase would cause the number of reporting entities to increase. decrease. remain constant. the answer cannot be determined from the information provided.

Remain constant. There are three reporting entities Paul Savage, Burger Haven, and Larry Jones. These same entities existed before and after the purchase of the restaurant.

Which of the following choices include only accounts that appear in the liability section of the balance sheet? Salaries payable, unearned revenue, accounts payable Accounts payable, notes payable, prepaid insurance. Notes payable, accounts payable, accounts receivables Accounts payable, prepaid rent, notes payable.

Salaries payable, unearned revenue, accounts payable

Which of the following accounts would not appear on a balance sheet? Cash Interest Payable Sales Revenue Retained Earnings

Sales Revenue

Dividends on which financial statement: Balance Sheet Income Statement Statement of Changes in Stockholder's Equity None of the above

Statement of Changes in Stockholder's Equity

Rushmore Company provided services for $25,500 cash during the 2016 accounting period. Rushmore incurred $19,000 expenses on account during 2016, and by the end of the year, $6,500 of that amount had been paid with cash. Assuming that these are the only accounting events that affected Rushmore during 2016, The amount of net income shown on the income statement is $12,500. The amount of net cash flow from operating activities shown on the statement of cash flows is $13,000. The amount of net income shown on the income statement is $6,500. The amount of net loss shown on the income statement is $6,500.

The amount of net income shown on the income statement is $6,500. $25,500 revenue - $19,000 expenses = $6,500 net income

Borrowing money from the bank is an example of an asset source transaction. True False This is true. Borrowing money from the bank is an example of an asset source transaction because the asset cash increases as well as the liability notes payable.

This is true. Borrowing money from the bank is an example of an asset source transaction because the asset cash increases as well as the liability notes payable.

Liabilities represent the future obligations of a business entity. True False

This is true. Liabilities represent the future obligations of a business entity.

RST Company issued common stock for $80,000 cash. $60,000 of the cash was used to pay off a note payable. As a result of these transactions: Total assets increased by $20,000. Total assets increased by $80,000. Total assets increased by $140,000. None of the above.

Total assets increased by $20,000.

Bledsoe Company received $17,000 cash from the issue of stock on January 1, 2016. During 2016 Bledsoe earned $8,500 of revenue on account. The company collected $6,000 cash from accounts receivable and paid $5,400 cash for operating expenses. Based on this information alone, during 2016, Total assets increased by $20,100. Total assets increased by $600. Total assets increased by $26,100. Total assets did not change.

Total assets increased by $20,100. $17,000 (cash) + $8,500 (accounts receivable) + $6,000 (cash) - $6,000 (accounts receivable) - $5,400 (cash) = $20,100 increase

Bledsoe Company received $27,000 cash from the issue of stock on January 1, 2016. During 2016 Bledsoe earned $9,700 of revenue on account. The company collected $8,400 cash from accounts receivable and paid $6,600 cash for operating expenses. Based on this information alone, during 2016, Total assets increased by $38,500. Total assets increased by $1,800. Total assets increased by $30,100. Total assets did not change.

Total assets increased by $30,100. $27,000 (cash) + $9,700 (accounts receivable) + $8,400 (cash) - $8,400 (accounts receivable) - $6,600 (cash) = $30,100 increase

Which of the following items would not appear on an income statement? Revenue Rent Expense Unearned revenue All of the items would appear on an income statement

Unearned revenue

On January 31, 2006, Allison Company purchased land for $8,500. The purchase would cause assets to: Decrease $8,500. Increase $8,500. Increase $17,000. Would not affect assets.

Would not affect assets.

Mize Company provided $45,500 of services on account, and collected $38,000 from customers during the year. The company also incurred $37,000 of expenses on account, and paid $32,400 against its payables. As a result of these events, total assets would increase total liabilities would increase total equity would increase all of these answer choices are correct

all of these answer choices are correct $45,500 - $32,400 = $13,100 increase in assets; $37,000 - $32,400 = $4,600 increase in liabilities; $45,500 - $37,000 = $8,500 increase in equity

Purchasing prepaid rent is classified as a(n): asset source transaction. asset use transaction. asset exchange transaction. claims exchange transaction.

asset exchange transaction. Purchasing prepaid rent increases one asset (prepaid rent) and decreases another asset (cash). Therefore, it is classified as an asset exchange transaction.

Hector Lopez owns Hector Company. If Hector has 100% ownership interest in the company, the Company's accountant will prepare only one set of statements that reflects the combined assets of Hector and his company. This statement is true. false.

false. Hector Company is a reporting entity that is separate from the owner Hector Lopez. Accountants would keep separate records for each entity. In this case there would be two sets of accounting records.

Resource owners want to provide resources to businesses with high profit potential because those businesses will pay higher taxes. This statement is true. false.

false. When businesses have to pay taxes, there is less profit available to share with the resource owners. As a result, resource owners want to avoid the consequences of taxation. The reason resource owners are willing to provide resources to companies with high profits is because those businesses have more profits to share with owners, are able to pay more interest to creditors, and are in a better position to pay higher prices for physical resources and wages. Ask yourself, would you want to work for a company that paid low wages because it had to pay high taxes?

Generally Accepted Accounting Principles (GAAP) are designed to provide guidance for financial accounting. managerial accounting. tax accounting. auditing service accounting.

financial accounting. Financial accounting reports are prepared for external users. Since the users operate outside the confines of a company they are not privy to the way management chooses to report accounting events. For example, suppose a company provides a service to a customer in year one but does not collect cash from its customer until year two. One company may decide to report revenue when the company earned it while another company may decide it is better to wait until the company receives the cash in year two. An external user would need to know how each company chooses to report its earnings in order to make comparisons between the companies. This is just one example of many alternative reporting methods that may be used to report on a variety of accounting transactions. To promote comparisons between companies, users need a standardized set of reporting rules. The rules that have evolved over time are called Generally Accepted Accounting Principles (GAAP). Since internal users are familiar with their company's reporting practices, there is no need to establish a set of rules for reporting managerial accounting practices. Tax rules are established by laws not GAAP and audit rules cover audit practice not financial reporting.

If total assets increase then liabilities must decrease and retained earnings must increase. common stock must increase and retained earnings must decrease. liabilities, common stock, or retained earnings must increase. liabilities, common stock, or retained earnings must decrease.

liabilities, common stock, or retained earnings must increase. If total assets increase, then assets had to be received from some source. In accordance with the accounting equation, the increase on the asset (left) side of the accounting equation must be offset by an increase on the source (right) side of the equation. Since liabilities, common stock, and retained earnings appear on the right side of the equation, an increase in an asset account must be offset by an increase in one of these right side accounts.

Ellen Elder and her brother, Buster started Elder Company when they each invested $600 in the company. After the investments there will be one reporting entity. two reporting entities. three reporting entities. four reporting entities.

three reporting entities. The three reporting entities are Ellen, Buster, and Elder Company.

Businesses earn profits by converting financial, physical, and labor resources into goods and services that satisfy consumer demands. This statement is true. false. .

true. Businesses add value by converting financial, physical, and labor resources into goods and services that consumers want. For example, a home builder may borrow $150,000 from a bank and spend the money to buy labor and materials used to build a house. The house may sell for $180,000 because a completed house is more valuable than unconverted labor and materials. In this case, the profit is $30,000 ($180,000 sales price of the house minus $150,000 cost of labor and materials).

Accounting provides a service to society by gathering and reporting information about a company's profit potential. This statement is true. false.

true. Businesses that efficiently produce products customers want are rewarded with high profits. For example, the invention and production of the iPhone generated billions of dollars of profit for Apple Inc. Resource owners prefer to provide resources to businesses with high earnings potential because such companies are better able to compensate them. Accounting provides a valuable service to society because it provides information that investors, creditors, owners of physical resources, and workers rely on to evaluate which businesses are worthy of receiving their resources.