Accounting Exam 1

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Income Statement

A financial statement showing the revenue and expenses for a fiscal period. (Period of Time)

A report prepared by management that presents financial information

Annual report

Basic Accounting Equation

Assets = Liabilities + Stockholders' Equity

Basic Accounting Equation (Balance Sheet Equation)

Assets = Liabilities + Stockholders' Equity

Accounts Receivable, Cash, Inventory, and Supplies

Current Assets

It is assumed that the activities of Ford Motor company can be distinguished from those of General Motors because of

Economic entity assumption

What organization issues U.S. accounting standards?

Financial Accounting Standards Board

Which accounting assumption assumes that an enterprise will continue in operation long enough to carry out its existing objectives and commitments?

Going concern assumption

which of the following organizations issues accounting standards for countries outside of the United States?

IASB

Which of the following is not an accounting assumption?

Integrity

A section of the annual report that presents management's views

Management discussion and analysis

description of favorable and unfavorable trends

Management discussion and analysis

Accumulated Depreciation, Buildings, and Land

PP&E

Balance sheet

Reports on the assets, liabilities, and stockholders' equity of the business as of a specific date.

The agency of the United States Government that oversees the U.S. financial markets is the

Security Exchange Commission

on a classified balance sheet, short-term investments are classified as

a current asset

which of the following is not classified properly as a current asset

a receivable from the sale of an asset to be collected in two years

Some examples of liabilities

accounts payable and salaries and wages payable

Generally accepted accounting principles

are accounting rules that are recognized as a general guide for financial reporting.

The periodicity assumption states that the economic life of a business can be divided into

artificial time periods

Land purchased

asset

Future economic benefits

assets

Certified Public Accountant (CPA)

auditors report

unqualified opinion

auditors report

increase in the debt to assets ratio

bad news

Accounts Receivable

balance sheet

Interest Payable

balance sheet

common stock

balance sheet

equipement

balance sheet

the operating cycle of a company is the average time that is required to go from cash to

cash in producing revenues

Issuance of ownership shares

common stock

Creditor claims against the assets of the business.

liabilities

Bonds Payable

liability

amounts owed to suppliers

liability

intangible assets are

listed after property, plant, and equipment

Investment in long-term bonds

long term investments

mortgage payable (due in 3 years)

long-term liabilities

Description of ability to pay near-term obligations

management discussion and analysis

Which accounting assumption or principle requires that only those things that can be expressed in dollar values are included in the accounting records?

monetary unit assumption

Descriptions of significant accounting policies

notes to the financial statements

details concerning liabilities, too voluminous to be included in the statements

notes to the financial statements

Equipment is classified on the balance sheet as

property, plant, and equipment

The two fundamental qualities of useful information are

relevance and faithful representation

amount recorded from selling a product

revenue

More owner control

sole proprietorship

ownerships is limited to one person

sole proprietorship

tax advantages

sole proprietorship and partnership

the claims of owners on the assets of a corporation are known as

stockholders' equity

The historical cost principle requires that when assets are acquired, they are recorded at

the amount paid to acquire them

liabilities generally classified on a balance sheet as

current liabilities and long term liabilities

An intangible asset

derives its value from the rights and privileges it provides the owner.

Distributions of cash from a corporation to its stockholders

dividends

which of the following is not considered an asset?

dividends

a current asset

expected to be converted to cash or used in the business within a relatively short period of time

cost of advertising

expense

Consumed assets or services.

expenses

Activities that involve collecting the necessary funds to start the business

financing

All of the following are qualities of useful information except

flexibility

Increase in current ratio

good news

intangible assets

goodwill, trademarks and patents

Advertising Expense

income statement

Service revenue

income statement

Officers and others who manage the business.

internal users

Involves acquiring the resources necessary to run the business

investing activities

Relevant accounting information

is information that is capable of making a difference in a business decision.

A business organized as a separate legal entity owned by stockholders is a

corporation

A separate legal entity under state laws

corporation

Easier to raise funds

corporation

Easier to transfer ownership

corporation

No personal legal liability

corporation

In a classified balance sheet, assets are usually classified as

current assets, long term investments, property, plant, and equipment, and intangible asset

Accounts Payable, Income Taxes Payable, Unearned Sales Revenue, Notes Payable

current liabilities


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