Accounting Chapter 1

The objective of financial accounting is to:

provide useful information for external decision makers

Generally accepted accounting principles are abbreviated as

GAAP

Which of the following financial statements shows a firm's financial position on a particular date? Multiple choice question. - Income statement - Statement of stockholders' equity - Balance sheet - Statement of cash flows

Balance sheet

Which of the following accounts is on the statement of stockholders' equity?

Common Stock

True or false: The SEC has delegated the primary responsibility for setting accounting standards to the AICPA.

False

Which of the following appear(s) on the balance sheet? - net income -utilities payable -common stock -salaries expense -accounts receivable

Utilities payable Common stock Accounts receivable

Ending retained earnings is calculated as Multiple choice question. -assets + net income - dividends -beginning retained earnings + net income + dividends -net income + dividends -beginning retained earnings + net income - dividends

beginning retained earnings + net income - dividends

Financial accounting should provide information that: (Select all that apply.)

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

Which of the following items are classified as financing activities on the statement of cash flows? (Select all that apply.)

issue stock pay dividend

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 Multiple choice question. -operating, investing, and financing. -recurring and nonrecurring. -current and noncurrent. -operating and nonoperating.

operating, investing, and financing.

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

statement of cash flows.

Ending retained earnings appears on the: (Select all that apply.) -income statement -statement of cash flows -statement of stockholders' equity -balance sheet

statement of stockholders' equity balance sheet

Retained earnings represents

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

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

In the heading

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

Which of the following items is a financing activity on the statement of cash flows? Purchase inventory Issue stock Pay suppliers Purchase land

Issue stock

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

Liabilities

Which of the following items are found on a balance sheet? (Select all that apply.) Liabilities Assets Stockholders' equity Revenue Dividends

Liabilities Assets Stockholders' equity

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

Management

Which of the following are attributes of FASB? (Select all that apply.) Part-time board members Private sector organization Public sector organization Full-time board members Independence

Private sector organization Full-time board members Independence

Which of the following is classified as an investing activity on the statement of cash flows? Multiple choice question. Purchase of inventory Purchase of land Payment of dividend Cash sale to customers

Purchase of land

Which of the following represents the net income earned by a corporation and not yet paid to shareholders?

Retained earnings

Which of these appears on both the statement of stockholders' equity and the balance sheet? Dividends Net income Retained earnings Cash

Retained earnings

An income statement includes which of the following item(s). (Select all that apply.)

Revenues Net income Expenses

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

SEC

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

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

expense; income statement

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

force a change in the standard.

Multiple Choice Question When a company earns net income, its retained earnings: Multiple choice question. -decrease -increase -are paid to stockholders -are converted to cash

increase

Undistributed profits that have accumulated in the company over time are called ______ Earnings

retained

Which of the following accounts are stockholders' equity accounts? (Select all that apply.) -Common stock -Land -Salaries Payable -Retained earnings -Cash

-Common stock -Retained earnings

Multiple Select Question Select all that apply Which of these would be found on a company's balance sheet? (Select all that apply.) Multiple select question. -Equipment -Depreciation expense -Accounts receivable -Sales revenue -Notes payable

-Equipment -Accounts receivable -Notes payable

Which of the following appear on the statement of stockholders' equity? -Net income -Dividends -Cash received during the accounting period -Property, plant, and equipment -Beginning balance of retained earnings

-Net income -Dividends -Beginning balance of retained earnings

Which of the following line items appear on an income statement? (Select all that apply.) -Supplies expense -Salaries expense -Supplies inventory -Cash -Service revenue -Accounts payable

-Supplies expense -Salaries expense -Service revenue

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

Annual Report

Which of the following accounts is on the statement of stockholders' equity? Common stock Accounts payable Cash Equipment

Common stock

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

Corporate management

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

Financial Accounting Standards Board.

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

True

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

cash receipts and cash disbursements during a period.

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

earned by the corporation

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

ethics

The three classifications on the statement of cash flows are cash flows from (Select all that apply.) operating activities. discontinued activities. financing activities. investing activities. business activities.

financing, investing, and operating activities

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

measure business activities. communicate information to investors and creditors.

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

public private