ch 1 t/f

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A retained earnings statement reports all changes in cash for a period of time.

false

About 90% of the businesses in the United States are organized as corporations.

false

An account receivable is typically classified as a revenue.

false

An example of a general-purpose financial statement would be a report about projected price increases related to transportation costs.

false

Cash dividends paid to stockholders decrease assets and increase equity.

false

Managerial accounting information is used by external and internal users equally.

false

Net income and net profit do not mean the same thing.

false

No significant differences exist between the accounting standards issued by the FASB and the IASB.

false

Only large companies such as Wal-Mart, JCP, General Motors, and the Bank of America can be organized as corporations.

false

Owners' rights to assets rank ahead of creditors' rights to assets.

false

Paying an account payable increases liabilities and decreases assets.

false

Proper ethical conduct implies that you only consider what's in your best interest

false

Proprietorships are owned by one owner and provide only services to their customers.

false

Purchasing supplies on account increases liabilities and decreases equity.

false

Receiving a bill or otherwise being notified that an amount is owed is not recorded until the amount is paid.

false

Receiving payments on an account receivable increases both equity and assets.

false

Revenue is earned only when money is received.

false

Senior executives cannot be criminally prosecuted for the wrong doings they commit on behalf of the companies where they work.

false

The excess of revenue over the expenses incurred in earning the revenue is called capital stock.

false

The main objective for all businesses is to maximize unrealized profits.

false

The main objective of a not-for-profit business is not to make a profit.

false

The primary role of accounting is to determine the amount of taxes a business will be required to pay to taxing entities

false

The statement of cash flows consists of three sections: cash flows from operating activities, cash flows from income activities, and cash flows from equity activities.

false

Two factors that typically lead to ethical violations are relevance and timeliness of accounting information.

false

An income statement is a summary of the revenues and expenses of a business as of a specific date.

fasle

The principal financial statements for a corporation are the income statement, the retained earnings statement, the balance sheet, and the budget.

fasle

A business is an organization in which basic resources or inputs, like materials and labor, are assembled and processed to provide outputs in the form of goods or services to customers.

true

A corporation is a business that is legally separate and distinct from its owners.

true

Accounting information users need reports about the economic activities and condition of businesses.

true

All financial statements are identified by the name of the business, the title of the statement, and the date or period of time

true

An account receivable is a claim against a customer arising from a sale on account.

true

An example of an external user of accounting information is the federal government

true

Expenses are assets that are used up during the process of earning revenue.

true

Financial accounting provides information to all users, while the main focus for managerial accounting is to provide information to the management.

true

Generally accepted accounting principles regulate how and what financial information is reported by businesses.

true

Some of the major fraudulent acts by senior executives started as what they considered to be small ethical lapses which grew out of control.

true

The Financial Accounting Standards Board (FASB) is the authoritative body that has primary responsibility for developing accounting principles

true

The Sarbanes-Oxley Act prohibits CPAs from providing nonaudit investment banking services.

true

The accounting equation can be expressed as Assets - Liabilities = Owners' Equity.

true

The balance sheet represents the accounting equation.

true

The basic difference between manufacturing and merchandising companies is the completion level of the products they purchase for resale to customers.

true

The cost concept is the basis for entering the exchange price into the accounting records.

true

The rights or claims to the assets of a business may be subdivided into rights of creditors and rights of owners.

true

The role of accounting is to provide many different users with financial information to make economic decisions.

true

The unit of measurement concept requires that economic data be recorded in a common unit of measurement.

true


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