Accounting 230

Keepers, Inc.'s balance sheet reported retained earnings as $10,000 at December 31, 2017 and $12,000 at the December 31, 2018. The income statement reported net income of $3,000 for the year ended December 31, 2018. Dividends declared for the year ended December 31, 2018 must

$1,000

Which of the following services may be provided by public accounting firms?

Audit Consulting Tax

Which of these would be found on a company's balance sheet?

Accounts receivable Equipment Notes payable

Which of the following financial statements shows a firm's financial position on a particular date?

Balance Sheet

The four financial statements published to provide information to external users include which of the following?

Balance Sheet, Statement of Cash Flows, Income Statement, Statement of Stockholders' Equity

____ is the common abbreviation for the Board that currently establishes financial accounting and reporting standards in the U.S.

FASB

Generally accepted accounting principles are abbreviated as

GAAP

Where is the time period covered by the income statement found?

In the heading

The legal authority to set accounting and reporting standards for companies whose securities are publicly traded lies with the

SEC

The heading of an income statement should include which of the following?

The name of the business The title of the financial statement The accounting period covered by the statement

True or false: Financial accounting information helps investors assess the profitability of companies.

True

The purpose of a statement of cash flows is to provide information about the

cash receipts and cash disbursements during a period.

A net loss ______ retained earnings.

decreases

A(n) ______ is a cost of doing business that is necessary to produce ___.

expense; revenue

True or false: The fundamental activities of a business are selling activities and marketing activities.

False (The fundamental activities are financing, investing and operating activities)

An income statement reports:

Net income, Revenues, Expenses

Identify the three most common forms of business organization.

Sole proprietorship, partnership, corporation

The two sources of stockholders' equity are amounts ______.

paid in from shareholders, earned by the corporation

The accumulated net income earned since the inception of the corporation and not yet paid to shareholders is referred to as

Retained earnings

____ is the amount recorded as a result of the sale of products or services to customers.

Revenue

Which of the following is classified as an investing activity on the statement of cash flows?

Sale of land

Which financial statement shows the changes in common stock and retained earnings?

Statement of stockholders' equity

The accounting equation is: Assets = Liabilities +

Stockholders' Equity

Which of the following items are found on a balance sheet?

Stockholders' equity Liabilities Assets

Which of the following line items appear on an income statement?

Supplies expense Revenues

Which of the following line items appear on an income statement?

Supplies expense, Salaries expense, Service revenue

True or false: The statement of stockholders' equity indicates the changes in the various equity accounts.

True

Which of the following appear(s) on the balance sheet?

Utilities payable Accounts receivable Common stock

The two main functions of _____ are to (1) measure business activities and (2) to communicate those measurements to investors and creditors.

accounting

The basic _____ is referred to as the fundamental model of business valuation.

accounting equation

The fundamental model of business valuation is commonly referred to as the:

accounting equation

The two primary functions of financial accounting are to:

communicate measurements to external parties and measure business activities.

A distribution of net income to owners is called a(n)

dividend

Shareholders' equity arises primarily from amounts invested by shareholders and amounts ______.

earned by the corporation

Salaries paid to employees for the month is a(n) ______ account that appears on the ______.

expense; income statement

Measuring business activities and reporting those measurements to external parties is the function of ______ accounting.

financial

______ accounting information helps investors make decisions

financial

Companies communicate information about their business activities primarily through

financial statements

If the SEC does not agree with a standard issued by the private sector, it can

force a change in the standard.

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

income statement

The financial statement that is most useful in explaining a company's stock price performance is the

income statement

When revenues are greater than expenses, a company has net Blank 1Blank 1 income, Correct Unavailable, whereas when revenues are less than expenses, a company has a net Bl

income; loss

Which of the following items is a financing activity on the statement of cash flows?

issue stock

Which of the following items are classified as financing activities on the statement of cash flows?

issue stock pay dividend

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

liabilities

Any amount owed to a creditor is classified in the balance sheet as a/an

liability

Two other types of information in addition to the financial statements that must be reported in the annual reports include

management discussion and analysis. notes disclosures.

In our society, the two main functions of accounting are to

measure business activities. communicate information to investors and creditors.

In financial accounting which of the following are the three types of business activities of a company?

operating activities investing activities financing activities

The three most common forms of business organization are sole proprietorship, ______, and ________

partnership and corporation

An accounting professional who provides accounting services to the company s(he) works for has a career in ______ accounting

private

Careers for accounting professionals typically include a choice between public and _____ accounting

private

Net income equals:

revenues minus expenses

Revenues are:

sales of goods or services to customers

A company reports a net loss if its revenues are ____ than its expenses.

smaller, less, lower or lesser

Identify the three most common forms of business organization.

sole proprietorship, partnership and corporation

The financial statement that provides information about cash receipts and cash disbursements for the period is the

statement of cash flows

For a corporation, the owners' claims to the resources of a company are called

stockholders' equity.

Financial accounting should provide information that:

tells about economic resources, claims to resources, and changes in resources and claims, is useful to investors and creditors in making decisions, helps to predict cash flows

The theory or benchmark used by standard setters for creating a consistent set of financial reporting rules is referred to as

the conceptual framework.

Expenses are:

the costs of doing business that are necessary to produce revenue

Stockholders' equity is

the owners' claims to resources of the corporation.

Retained earnings represents

the total net income earned over the life of the company that has not been distributed as dividends.

Management discussion and analysis and note disclosures to the financial statements are included in the

annual report

Ending retained earnings is calculated as

beginning retained earnings + net income - dividends

The financial statement that summarizes the profit-generating activities of a company during a particular period of time is the

income statement

Amounts owed to creditors are

liabilities.

Revenues minus expenses equals

net income

Pizza Aroma generated $11,000 in revenues and had expenses of $6,000. Pizza Aroma's net income or loss is:

net income of $5,000

When expenses are greater than revenues, it is referred to as

net loss

The objective of financial accounting is to:

provide useful information for external decision makers

An advantage of the corporate form of organization is that a corporation

provides limited liability to stockholders.

Audit, tax preparation and planning, and business consulting services are typically provided by _________.

public accounting

Milton Corp. has beginning retained earnings of $800. During the year Milton had $2,000 of revenues and $900 in expenses. Milton paid a dividend of $100. What is retained earnings at year-end?

$1,800

Quartz Instruments had retained earnings of $145,000 at December 31, 2017. Net income for 2018 was $90,000, and dividends for 2018 were $30,000. What amount of retained earnings should be reported at December 31, 2018?

$205,000

A(n) ____ is a resource, such as cash, land, or buildings, that is owned by a company

Asset

Using the accounting equation, stockholders' claims on the resources of the corporation can be expressed as

Assets - Liabilities.

Which of the following is the accounting equation?

Assets = Liabilities + Stockholders' equity

The financial statement that displays a firm's financial position on a particular date is the

Balance Sheet

If investors or lenders were interested in the amount of debt a company currently has, which financial statement would they need?

Balance sheet

Robert Lending Company is considering granting a large loan to Flora Inc. Robert's policy is to lend money only to companies with a relatively small amount of currently outstanding debt. Prior to making a decision, Robert Lending Company should examine which of Flora's financial statement?

Balance sheet

Which of the following appear on the statement of stockholders' equity?

Beginning balance of retained earnings Dividends Net income

Which of the following accounts are stockholders' equity accounts?

Common stock Retained earnings

Who has the responsibility for preparing financial statements in accordance with generally accepted accounting principles?

Corporate management

A business organization that is legally separate from its owners is called a(n)

Corporation

The form of business organization where an entity is legally separate from its owners and issues shares of stock is a

Corporation

____ is a term that refers to a code or moral system that provides criteria for evaluating right or wrong.

Ethics

The FASB's objectives for financial accounting include which of the following?

Help predict cash flows Report on economic resources Provide useful information to investors and creditors Concept Resources

Which of the following are attributes of FASB?

Independence, Full-time board members, Private sector organization

The accounting equation is: Assets = ______ + Stockholders' Equity.

Liabilities

Who has the responsibility to apply accounting standards when communicating with investors and creditors?

Management

___________accounting deals with the concepts and methods used to provide information to an organization's internal users.

Managerial

Which of the following appear on the statement of stockholders' equity?

Net income Beginning balance of retained earnings Dividends

____ activities involve purchasing goods from suppliers, designing and manufacturing products, and selling products to customers.

Operating

Which of the following are operating activities?

Paying advertising expenses Providing services to customers Paying salaries to employees

Which of the following is classified as an investing activity on the statement of cash flows?

Purchase of Land

Which of the following is classified as an investing activity on the statement of cash flows?

Purchase of land