Accounting Test Chapter 1

Which of the following statements is NOT correct about the financial statements?

A balance sheet reports assets, liabilities, revenues, and expenses.

The accounting equation is defined as

Assets = Liabilities + Stockholders' Equity

The balance sheet depicts which of the following equations?

Assets = liabilities + stockholders' equity.

Which of the following financial statements reports a company's retained earnings?

Balance sheet.

Which of the following accounts appears in the statement of stockholders' equity?

Common Stock.

The form of business organization that is legally separate from its owners is a

Corporation

GAAP is an abbreviation for:

Generally Accepted Accounting Principles

Net income (loss) appears in which two financial statements?

Income statement and statement of stockholders' equity.

Creditors' claims to a corporation's resources are referred to as

Liabilities

What is the primary purpose of financial accounting?

Measure business transactions and communicate those measures to external users to make decisions.

Which of the following items is reported in the statement of stockholders' equity?

Net income

Net income can best be described as

Revenues - Expenses

Which of the following best explains the meaning of total stockholders' equity?

The amount of capital invested by stockholders plus profits retained over the life of the company.

If a company has stockholders' equity of $60,000 at the end of the year, which of the following statements must be true?

The company's assets exceed liabilities by $60,000.

Which of the following items would not appear in an income statement?

accounts payable

The accounts that represent the resources of the company are called

assets

The costs of providing goods and services to customers are referred to as

expenses

Which accounting number has the single greatest impact on stock prices?

net income