Financial Accounting: Chapter 1 Quiz

Which of the following represents a resource of the company?

Assets

Which of the following equations correctly represents the fundamental accounting equation?

Assets= Liabilities + Stockholders Equity

Which financial statement reports a company's assets and liabilities?

Balance Sheet

Which financial statement shows that a company's resources equal claims to those resources?

Balance Sheet

The most lucrative activity of public accountants typically is:

Business consulting

The underlying foundation for the development of accounting standards and interpretation of accounting information is referred to as the:

Conceptual Framework

Which of the following describes the cost of selling to customers?

Expenses

Financial accounting and reporting standards in the United States are established primarily by the

Financial Accounting Standards Board

Which body has the primary responsibility for the establishment of Generally Accepted Accounting Principles?

Financial Accounting Standards Board (FASB)

Based on the introductory section of this chapter, which course is most like financial accounting?

Foreign Language

The body of rules and procedures that guide the measurement and communication of financial accounting information is known as

Generally Accepted Accounting Principles

The term GAAP stands for:

Generally Accepted Accounting Principles

In which financial statement does a company report its expenses?

Income Statement

In which financial statement does a company report its revenues?

Income Statement

Which financial statement conveys a company's ability to generate profits in the current period?

Income Statement

Which financial statement shows a company's revenues and expenses?

Income Statement

Which of the following best describes financial accounting?

Information measurement/communication process

Financial accounting provides information primarily to:

Investors and creditors

Why does financial accounting have a positive impact on our society?

It allows investors and creditors to redirect their resources to only successful companies

Financial accounting is often referred to as a:

Language of business

Amounts owed by the company are referred to as

Liabilities

Amounts owed to creditors are reported as:

Liabilities

Which of the following represents an obligation of the company?

Liabilities

Financial accounting helps with:

Maintaining records of multiple business transactions, Exchange of goods and services among individuals, Development of more complex societies.

Who ultimately is responsible for properly applying GAAP? The company's:

Management

Financial accounting serves which primary function(s)?

Measuring business activities and communicating business activities to interested parties

Which single piece of information best explains most companies' stock price performance?

Net Income

A company reports the following in its income statement: Total revenues of $500,000 and total expenses of $300,000. Which of the following is true? (Find net income)

Net income equals $200,000

A component/aspect of relevant accounting information includes:

Predictive Value

Public accounting firms refer to:

Professional service firms that focus on auditing and tax preparation

Sales of products or services are referred to as

Revenues

Based on the introductory section of this chapter, financial accounting can also be described as a way to

Tell the financial story of a company

The financial statement that shows the financial position of a company at a specific point in time is called the:

The Balance Sheet

The balance in retained earnings represents:

The amount of income earned over the company's life minus the dividends paid to shareholders over the company's life.

Which of the following best describes an important function of financial accounting?

To support the efficient distribution of society's resources

A company reports the following in its balance sheet: Total assets of $800,000 and total liabilities of $700,000. Which of the following is true? (subtract assets from liabilities)

Total stockholders equity equals $100,000

Traditional careers in public accounting include:

auditors, tax preparers/planners, and business consultants

Financial accounting information is essential to:

making good business decisions

The fundamental qualitative characteristics of accounting information identified by the FASB are:

relevance and faithful representation

Expenses represent:

the cost of providing products and services to customers