Accounting Chapter 1

Which of the following appear(s) on the balance sheet?

Common stock Utilities payable Accounts receivable

Which of the following is an alternate form of the accounting equation?

Assets − Liabilities = Stockholders' Equity

Balance Sheet

Assets, liabilities, and 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 these would be found on a company's balance sheet?

Accounts receivable Equipment Notes payable

Which of the following financial statements shows a firm's financial position on a particular date?

Balance sheet

Which of the following appear on the statement of stockholders' equity?

Beginning balance of retained earnings Dividends Net income

The form of business organization where an entity is legally separate from its owners and issues shares of stock is a

Corporation

is a term that refers to a code or moral system that provides criteria for evaluating right or wrong.

Ethics

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

Financial

The private sector organization that is currently responsible for setting accounting standards in the United States is the

Financial Accounting Standards Board. (FASB)

Net income appears in which two financial statements?

Income Statement and Statement of Stockholders' Equity

Which financial statement reports revenues and expenses?

Income statement

The organization responsible for creating a single set of global accounting standards is the:

International Accounting Standards Board

The FASB has explicitly stated the specific objectives of financial accounting. Which of the following is not one of those objectives?

It is useful to company management in making decisions.

What was the objective of the 1933 Securities Act?

It set forth accounting and disclosure requirements for initial offerings of securities.

The accounting equation is: Assets = ______ + Stockholders' Equity.

Liabilities

You are reading a particular section of a bank's annual report. This section provides the bank's views about the impact of an upcoming regulation on the banking industry as a whole and the bank in particular. Which section of the annual report are you reading?

Management's discussion and analysis

Statement of Cash Flows

Operating, investing, and financing activities

Which of the following are attributes of FASB?

Private sector organization Independence Full-time board members

Income Statement

Revenues and expenses

The four financial statements published to provide information to external users include which of the following?

Statement of Cash Flows Balance Sheet Income Statement Statement of Stockholders' Equity

Which of the following are financial statements?

Statement of stockholders' equity Balance sheet Income statement

The accounting equation is: Assets = Liabilities +

Stockholders' Equity

Which of the following items are found on a balance sheet?

Stockholders' equity Assets Liabilities

Which of the following is not one of the four primary financial statements?

Trial Balance

Which of the following questions is most likely to be asked by a creditor?

Will the company be capable of repaying its debt when it is due?

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

accounting

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

balance sheet

Ending retained earnings is calculated as

beginning retained earnings + net income - dividends

The purpose of a statement of cash flows is to provide information about the

cash receipts and cash disbursements during a period.

The primary functions of accounting are to:

communicate information to decision makers. measure a company's activities.

In our society, the two main functions of accounting are to

communicate information to investors and creditors. measure business activities.

Part of the inventory of memory chips of a semiconductor company is obsolete because of the launch of more advanced products. However, the company's management still carries this inventory at historical prices in its balance sheet. Which primary qualitative characteristic is being violated here?

completeness

Which of the following is a feature of the corporate form of business ownership?

double taxation

A code or moral system that provides criteria for evaluating right and wrong is referred to as

ethics

Salaries already paid to employees for the month is a(n) ______ account that appears on the ______.

expense; income statement

To be useful for decision making, information should possess the fundamental qualities of relevance and

faithful representation

Financial accounting primarily deals with the methods accountants use to provide information to an organization's internal users.

false

Investors and creditors rely heavily on managerial accounting information in making investment and lending decisions.

false

Companies communicate information about their business activities primarily through

financial statements.

The three classifications on the statement of cash flows are cash flows from

financing activities. investing activities. operating activities.

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

income statement

The financial statement that summarizes revenues and expenses for a 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.

When a company earns net income, its retained earnings:

increase

A balance sheet lists the assets, _______ , and stockholders' equity as of a specific date.

liabilities

Based on the concept of _____, big companies probably do not record all their assets as assets.

materiality

The primary functions of accounting are to:

measure a company's activities. communicate information to decision makers.

Which of the following best explains a company's stock price performance?

net income

The statement of cash flows classifies items as

operating, investing, and financing.

The two sources of stockholders' equity are amounts ______.

paid in from shareholders earned by the corporation

An advantage of the corporate form of organization is that a corporation

provides limited liability to stockholders.

The hierarchy of qualitative characteristics of financial information require that, in order to be useful for decision making, information should possess the fundamental characteristics of

relevance and faithful representation.

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

retained earnings

Undistributed profits that have accumulated in the company over time are called

retained earnings

The financial statement that provides information about cash receipts and cash disbursements for the period is the

statement of cash flows.

Retained earnings represents

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

Which of the following is an important indicator of a company management's ability to respond to business situations and the possibility of bankruptcy?

total liabilities

According to the cost constraint, financial accounting information is provided when the benefits of providing the information exceed the costs.

true

If mistakes or fraudulent reporting behavior are discovered, auditors require the company to correct all significant information before issuing financial statements.

true

The main functions of financial accounting are to measure business activities and to communicate those measurements to investors and creditors.

true