Accounting CH1: Framework for Financial Accounting

Generally accepted accounting principles are abbreviated as

GAAP

For a corporation, the owners' claims to the resources of a company are called revenues. liabilities. assets. stockholders' equity.

stockholders' equity

owners' claim to resources

stockholders' equity

The system that maintains records of a company's operations and then communicates that information to decision makers is referred to as

Accounting

Which of the following is the accounting equation? Assets = Liabilities + Stockholders' equity Assets = Liabilities + Net income Revenue - Expenses = Net income Assets + Liabilities = Stockholders' equity

Assets = Liabilities + Stockholders' equity

Which of the following provides the most important support for the ethical foundation of accounting? Legislation such as the Sarbanes-Oxley Act Both are equally important Accountants' ethical conduct

Both

Research and Development Expense

Expense

Utilities Expense

Expense

Income Tax Payable

Liability

Interest Payable

Liability

Salaries Payable

Liability

Common Stock

Stockholders' Equity

Which of the following items are assets? (Select all that apply.) Notes Payable Supplies Equipment Dividends

Supplies Equipment

Resources owned by a company are called stockholders' equity. assets. revenues. liabilities.

assets

resources of a company

assets

The financial statement that displays a firm's financial position on a particular date is the -------- --------

balance sheet

A(n) ______ is a cost of doing business that is necessary to produce ___. Multiple choice question. revenue; assets liability; expenses dividend; revenue expense; revenue

expense; revenue

The abbreviation GAAP stands for generally acknowledged accountant's policies. generally accepted accounting principles. generally accepted accounting projects.

generally accepted accounting principles

amounts owed

liabilities

Any amount owed to a creditor is classified in the balance sheet as a/an

liability

Which of the following appear on the statement of stockholders' equity? Net income Dividends Cash received during the accounting period Beginning balance of retained earnings Property, plant, and equipment

net income dividends beginning balance of retained earnings

Profits earned by a company that have not been paid to stockholders are called earnings

retained

Service Revenue

revenue

The financial statement that summarizes the profit-generating activities of a company during a particular period of time is the statement of stockholders' equity. income statement. statement of cash flows. balance sheet.

income statement

Land

Asset

A net loss ______ retained earnings. decreases increases has no effect on

decreases

Revenues minus expenses equals total liabilities. net income. stockholders' equity. total assets.

net income

Stockholders' equity arises primarily from amounts invested by shareholders and amounts borrowed from investors borrowed from banks earned by the corporation received by customers

earned by the corp

Measuring business activities and reporting those measurements to external parties is the function of accounting financial managerial both financial and managerial

financial

Stockholders' equity is the resources owned by a corporation amounts owed by a corporation the owners' claims to resources of the corporation

the owners' claims to resources of the corporation

Retained earnings represents the net assets of the company during the current period. the total cash the company has accumulated over its life. the total operating, investing, and financing activities of the company. the total net income earned over the life of the company that has not been distributed as dividends

the total net income earned over the life of the company that has not been distributed as dividends

The four financial statements published to provide information to external users include which of the following? 1Statement of Business Activities 2Statement of Stockholders' Equity 3Statement of Assets 4Income Statement 5Balance Sheet 6Statement of Cash Flows

2,4,5,6

Revenues are 1the amount of cash a company has left after it has paid its obligations 2amounts owed to creditors 3sales of goods or services to customers 4cash payments that a business has made directly to its owners 5amounts that owners have contributed directly to the business

3 sales of goods or services to customers

Supplies

Asset

Using the accounting equation, stockholders' claims on the resources of the corporation can be expressed as Assets + Revenues. Liabilities + Revenues. Assets + Liabilities. Assets - Liabilities.

Assets - Liabilities.

Which of the following financial statements shows a firm's financial position on a particular date? Statement of stockholders' equity Balance sheet Income statement Statement of cash flows

Balance Sheet

While the Sarbanes-Oxley Act provides important support for the ethical foundation of accounting, _____ are equally important professional accounting organizations accountants' personal ethical standards standardized licensing requirements for accounts tax laws

accountants' personal ethical standards

The two main functions of ------- are to (1) measure business activities and (2) to communicate those measurements to investors and creditors

accounting

distributions to stock holders

dividends

costs of selling products or services

expenses

Companies communicate information about their business activities primarily through their tax return. public relations announcements. financial statements.

financial statements

represent a company's primary means of communicating information to external users

financial statements

Which financial statement reports revenues and expenses? Income statement Statement of cash flows Balance sheet Statement of stockholders' equity

income statement

Which of the following are financial statements? Statement of assets Income statement Statement of corporate responsibility Balance sheet Statement of stockholders' equity

income statement balance sheet statement of stockholders' equity

Which of the following represents the net income earned by a corporation and not yet paid to shareholders? Retained earnings Additional paid-in capital Paid-in capital Other comprehensive income

retained earnings

is the amount recorded as a result of the sale of products or services to customers

revenue

sales of a product or service

revenues

Net income equals: revenues plus expenses revenues minus expenses assets minus liabilities revenues minus expenses minus dividends

revenues minus expenses

Expenses are amounts paid to stockholders for their investment always less than revenues equal to a company's liabilities the costs of doing business that are necessary to produce revenue

the costs of doing business that are necessary to produce revenue

Information that best explains companies' stock price performance is reported on the ----- ----

income statement

The financial statement that is most useful in explaining a company's stock price performance is the statement of stockholders' equity. balance sheet. income statement.

income statement

Equipment

Asset

The primary functions of accounting are to 1 communicate information to decision makers. 2 increase a company's stock market valuation. 3 measure a company's activities. 4 provide information to taxing authorities. 5 increase a company's profitability.

1 & 3

Which of the following items are reported on the balance sheet as liabilities? 1Wages and salaries payable 2Supplies inventory 3Cash received from a client 4Notes payable

1 & 4

The Two Primary functions of a financial accounting are to: 1.report income to taxing authorities 2.communicate measurements to external parties 3.measure business activities 4.provide information for internal users

2 & 3

------ is the common abbreviation for the Board that currently establishes financial accounting and reporting standards in the U.S.

FASB

The private sector organization that is currently responsible for setting accounting standards in the United States is the Securities and Exchange Commission. Financial Accounting Standards Board. Accounting Principles Board. Committee on Accounting Procedure.

Financial Accounting Standards Board