ACCT Chapter 1
A code or moral system that provides criteria for evaluating right and wrong is referred to as
ethics
Balance Sheet Equation
Assets = Liabilities + Stockholders' Equity + Retained Earnings
The accounting equation is: Assets = ______ + Stockholders' Equity.
Liabilites
The statement of cash flows classifies items as
operating, investing, and financing.
Costs of selling products or services.
Expenses selected
Which of the following are attributes of FASB?
Independence, Full-time board members, Private sector organization
Which of these would be found on a company's balance sheet? (Select all that apply.)
Notes payable, Accounts receivable, Equipment
Sales of products or services.
Revenue
The impact of financial accounting information on investors' and creditors' decisions is closely related to the concept of:
materiality
Which items are found on an income statement?
revenues, expenses
Retained earnings represents
the total net income earned over the life of the company that has not been distributed as dividends.
Ending retained earnings is calculated as
Retained Earnings = All net income − All dividends
Owners' claims to resources.
Stockholders' equity
Which of the following items are found on a balance sheet?
Stockholders' equity, Assets, Liabilities
Resources of a company.
Assets
Management discussion and analysis and note disclosures to the financial statements are included in the
annual report
Faithful representation requires information to have which of the following three characteristics?
completeness, Neutrality, Free from material error
Faithful representation requires that information is complete, neutral, and
free-from-material error
The financial statement that summarizes the profit-generating activities of a company during a particular period of time is the
income statement
The financial statement that is most useful in explaining a company's stock price performance is the
income statement.
The three classifications on the statement of cash flows are cash flows from (Select all that apply.)
investing activities., financing activities., operating activities
The characteristic that a new accounting standard should not favor one group of companies over others or achieve a particular social outcome is an example of
neutrality
Which qualitative characteristic requires that financial information should not influence decision making to achieve a predetermined result?
neutrality
In addition to the financial statements, which of the following must be included in the annual reports?
notes disclosures, management discussion and analysis.
Predictive value and confirmatory value are components of which fundamental qualitative characteristic?
relevance
The financial statement that provides information about cash receipts and cash disbursements for the period is the
statement of cash flows
The purpose of an income statement is to:
summarize the profit-generating activities that occurred during a particular reporting period
The financial statement that provides information about cash receipts and cash disbursements for the period is the
Cash Statement
Statement of Cash Flows Equation
Cash flows from operating activities + cash flows from investing activities + cash flows from financing activities = change in cash
To be useful for decision making, information should possess the fundamental qualities of relevance and representation.
Faithful representation.
Undistributed profits that have accumulated in the company over time are called (Enter only one word.)
Retained earnings
The two sources of stockholders' equity are amounts
paid in from shareholders earned by the corporation
Which of the following financial statements shows a firm's financial position on a particular date?
Balanced Sheet
Retained Earnings Equation
Beginning Retained Earnings + Net Income - Dividends = Ending Retained Earnings
Statement of Stockholders' Equity Equation
Beginning Retained Earnings + Net Income - Dividends = Ending Retained Earnings
Distributions to stockholders.
Dividends selected
The private sector organization that is currently responsible for setting accounting standards in the United States is the
FASB
Amounts owed.
Liabilities
Confirmatory value Predictive value
Positive income is consistent with effectiveness of management. Consistently increasing income helps forecast the company's ability to generate future cash.
Financial information that is immaterial in amount or nature need not be reported under GAAP.
True
Which of the following appear(s) on the balance sheet?
Utilities payable Common stock Accounts receivable
In our society, the two main functions of accounting are to
communicate information to investors and creditors., measure business activities.