Accounting Chapter 1: A Framework for Financial Accounting

A code or moral system that provides criteria for evaluating right and wrong is referred to as

Ethics

True or false: Technical accounting skills represent the only skills required of accounting professionals.

False

___ Statements represent a company's primary means of communicating information to external users.

Financial

The private sector organization that is currently responsible for setting accounting standards in the United States is the

Financial Accounting Standards Board.

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

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

Which of the following are financial statements?

Income statement, statement of stockholders' equity, and balance sheet.

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

Retained Earnings

The system that maintains records of a company's operations and then communicates that information to decision makers is referred to as

accounting

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

accounting

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

annual report

Accounting professionals:

are in high demand

Ending retained earnings is calculated as

beginning retained earnings + net income - dividends

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

cash receipts and cash disbursements during a period.

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

communicate information to investors and creditors. measure business activities.

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

corporation

A net loss ______ retained earnings.

decreases

The two sources of stockholders' equity are amounts ______.

earned by the corporation paid in from shareholders

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

expense; income statement

Which items are found on an income statement?

expenses and revenues

To be useful for decision making, information should possess the fundamental qualities of relevance and ____ representation

faithful

Companies communicate information about their business activities primarily through

financial statements.

The three classifications on the statement of cash flows are cash flows from

financing activities. investing activities. operating activities.

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

income statement

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

income statement

The financial statement that summarizes revenues and expenses for a period of time is the

income statement

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

income statement.

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

liabilities

The primary functions of accounting are to:

measure a company's activities. communicate information to decision makers.

In addition to the financial statements, which of the following must be included in the annual reports?

notes disclosures. management discussion and analysis.

The statement of cash flows classifies items as

operating, investing, financing

Careers for accounting professionals typically include a choice between public and ___ accounting.

private

The two main career paths in accounting are referred to as:

private public

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

provides limited liability to stockholders.

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.

Undistributed profits that have accumulated in the company over time are called ___ earnings.

retained

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

statement of cash flows.

The accounting equation is: Assets = Liabilities +

stockholders equity

The purpose of an income statement is to:

summarize the profit-generating activities that occurred during a particular reporting period

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

Which of the following knowledge and skills should an accounting professional possess?

Ability to work in teams Leadership skills Technical accounting knowledge Presentation skills

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

Balance Sheet

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

Balance sheet

Which of the following appear on the statement of stockholders' equity? (Select all that apply.)

Dividends Net income Beginning balance of retained earnings

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

Ethics

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

FASB

Which of these would be found on a company's balance sheet? (Select all that apply.)

Notes payable Equipment Accounts receivable

True or false: Accounting professionals enjoy a wide variety of career opportunities.

True

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

Assets Stockholders' equity Liabilities

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

Common stock Accounts receivable Utilities payable

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

Liabilities