Accounting SB1
Select the account classification that matches with the description. e. Resources of a company.
Assets
_______ are the resources of a company,
Assets
Select the financial statement to which the item belongs. d. Total amounts owed to workers at the end of the year.
Balance Sheet
If the same accounting principles and methods are used for similar events by two different firms, this enhances what accounting qualitative characteristic?
Comparability
According to the conceptual framework, for accounting information to be relevant, what two qualities must it possess?
Confirmatory value and Predictive value
__________ is the common abbreviation for the Board that currently establishes financial accounting and reporting standards in the U.S. (Enter the acronym.)
FASB
Accounts payable
Liability on balance sheet
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
Select the financial statement to which the item belongs. b. Amount of cash received from borrowing money from a local bank.
Statement of cash flows
Select the financial statement to which the item belongs. a. The change in retained earnings due to net income and dividends.
Statement of stockholders' equity
Select the account classification that matches with the description. b. Owners' claims to resources.
Stockholders' Equity
A consensus among different individuals appraising the value of land describes which qualitative accounting characteristic?
Verifiability
The concept of understandability assumes that the users of financial statements should have
a reasonable understanding of business and economic activities.
The purpose of a statement of cash flows is to provide information about the
cash receipts and cash disbursements during a period.
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
income statement
Select the account classification that matches with the description. c. Distributions to stockholders.
Dividends
Pizza Aroma generated $11,000 in revenues and had expenses of $6,000. Pizza Aroma's net income or loss is:
(Revenues - expenses) 11,000-6000 = net income of $5,000
The financial statement that provides information about cash receipts and cash disbursements for the period is the
statement of cash flows.
For a corporation, the owners' claims to the resources of a company are called
stockholders' equity.
An income statement includes which of the following items? (Select all that apply.)
Expenses Net income Revenues
Select the account classification that matches with the description. d. Costs of selling products or services.
Expenses
Generally accepted accounting principles are abbreviated as ____________. (Enter the acronym in the blank)
GAAP
Where is the time period covered by the income statement found?
In the heading
Select the financial statement to which the item belongs. c. Revenue from sales to customers during the year.
Income Statement
Select the account classification that matches with the description. f. Amounts owed.
Liabilities
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 of the following is classified as an investing activity on the statement of cash flows?
Sale of land and Purchase of land
Which of the following line items appear on an income statement? (Select all that apply.) 2
Supplies expense Revenues
Which of the following line items appear on an income statement? (Select all that apply.)
Supplies expense Salaries expense Service revenue
_____ refers to information being available to users early enough to allow them to use it in the decision process.
Timeliness or timely
True or false: Financial information that is immaterial in amount or nature need not be reported under GAAP.
True
Supplies inventory
asset on balance sheet
An enhancing qualitative characteristic of accounting information that refers to the financial statement users' ability to utilize accounting information to differentiate between companies that are reporting similar events is
comparability.
The qualitative characteristic of using the same accounting method each period over time refers to the concept of ______
consistency
Using the same accounting methods in each period refers to the qualitative characteristic of
consistency.
A net loss ______ retained earnings.
decreases
Measuring business activities and reporting those measurements to external parties is the function of ______ accounting.
financial
Faithful representation requires that information is complete, neutral, and
free from material error.
Investors
make good decisions related to buying and selling their shares of the company's stock
The impact of financial accounting information on investors' and creditors' decisions is closely related to the concept of:
materiality
Which qualitative characteristic requires that financial information should not influence decision making to achieve a predetermined result?
neutrality
Revenues are:
sales of goods or services to customers
The qualitative characteristic wherein information is available early enough allowing it to be useful for a decision describes the concept of
timeliness
Which of the following are financial statements? (Select all that apply.)
- Income statement - Statement of stockholders' equity - Balance sheet
Which of the following appear on the statement of stockholders' equity? (Select all that apply.)
- Net income - Beginning balance of retained earnings - Dividends
Faithful representation requires information to have which of the following three characteristics?
- Neutrality - Completeness - Free from material error
Which of the following are attributes of FASB? (Select all that apply.)
- Private sector organization - Independence - Full-time board members
Which items are found on an income statement?
Expenses Revenues
Select the account classification that matches with the description. a. Sales of products or services.
Revenues
The accounting characteristic that requires a user to comprehend the information within the context of the decision being made is referred to as
understandability.
Which of the following accounts is on the statement of stockholders' equity?
Common Stock
True or false: The statement of stockholders' equity indicates the changes in the various equity accounts.
True
Revenues will ______ retained earnings, and expenses will ______ retained earnings.
increase; decrease
Cash
Asset on Balance Sheet
A balance sheet lists the assets, ___________, and stockholders' equity as of a specific date.
liabilities
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
Profits earned by a company that have not been paid to stockholders are called _______ earnings. (Enter only one word.)
retained
Undistributed profits that have accumulated in the company over time are called _______ earnings. (Enter only one word.)
retained
The result of profit-generating activities
revenues
Net loss
revenues exceed expenses
Which of the following financial statements shows a firm's financial position on a particular date?
Balance Sheet
Which of these would be found on a company's balance sheet? (Select all that apply.)
Equipment Notes payable Accounts receivable
Which financial statement reports revenues and expenses?
Income statement
The two main career paths in accounting are referred to as:
Private and public
Which of these appears on both the statement of stockholders' equity and the balance sheet?
Retained earnings
Managerial Accounting
accounting information that is provided for internal users (managers)
The financial statement that displays a firm's financial position on a particular date is the ______ _______. (Enter one word per blank)
balance sheet
A code or moral system that provides criteria for evaluating right and wrong is referred to as
ethics
_______ is a term that refers to a code or moral system that provides criteria for evaluating right or wrong. (Enter one word per blank)
ethics or ethical conduct or ethical
Companies communicate information about their business activities primarily through
financial statements.
If the SEC does not agree with a standard issued by the private sector, it can
force a change in the standard.
The abbreviation GAAP stands for
generally accepted accounting principles.
The SEC
has the legal right to set accounting standards, but it has largely delegated this duty to FASB; the SEC regulates financial markets
Any amount owed to a creditor is classified in the balance sheet as a/an
liability
An advantage of the corporate form of organization is that a corporation
provides limited liability to stockholders.
The four financial statements published to provide information to external users include which of the following?
- Statement of Cash Flows - Statement of Stockholders' Equity - Income Statement - Balance Sheet
The heading of an income statement should include which of the following? (Select all that apply.)
- The accounting period covered by the statement - The title of the financial statement - The name of the business
Which of the following items are reported on the balance sheet as liabilities? (Select all that apply.)
- Wages and salaries payable - Notes payable
The two primary functions of financial accounting are to:
1. measure business activities 2. communicate measurements to external parties.
Keepers, Inc.'s balance sheet reported retained earnings as $10,000 at December 31, 2017 and $12,000 at the December 31, 2018. The income statement reported net income of $3,000 for the year ended December 31, 2018. Dividends declared for the year ended December 31, 2018 must equal $.
1000
Which of the following is the accounting equation?
Assets = Liabilities + Stockholders' equity
In our society, the two main functions of accounting are to
Communicate information to investors and creditors Measuring business activities
Correctly match the terms with the descriptive example. Confirmatory Value Predictive Value
Confirmatory value - Positive income is consistent with effectiveness of management. Predictive value - Consistently increasing income helps forecast the company's ability to generate future cash.
Who has the responsibility for preparing financial statements in accordance with generally accepted accounting principles?
Corporate management
A business organization that is legally separate from its owners is called a(n)
Corporation
Norton Corp. has revenues of $5,000 and expenses of $2,000. What is the total effect on retained earnings?
Increases $3,000
The three classifications on the statement of cash flows are cash flows from (Select all that apply.)
Investing activities Operating activities Financing activities.
Which of the following items are classified as financing activities on the statement of cash flows? (Select all that apply.)
Issue Stock Pay Dividend/Dividend
Which of the following items is a financing activity on the statement of cash flows?
Issue stock
The accounting equation is: Assets = ______ + Stockholders' Equity.
Liabilities
________ represent amounts owed to creditors
Liabilities
Who has the responsibility to apply accounting standards when communicating with investors and creditors?
Management
Which of these appears on the income statement
Revenues and Expenses
The two main functions of _______ are to (1) measure business activities and (2) to communicate those measurements to investors and creditors. (Enter only one word.)
accounting
Auditors express
an opinion on the financial statements, which are the responsibility of a company's management
Management discussion and analysis and note disclosures to the financial statements are included in the _______ ________. (Enter one word per blank.)
annual report or 10 K
Management discussion and analysis and note disclosures to the financial statements are included in the ______ _______. (Enter one word per blank.)
annual report or 10 k
In addition to the financial statements, which of the following must be included in the annual reports?
management discussion and analysis notes disclosures
The accumulated net income earned since the inception of the corporation and not yet paid to shareholders is referred to as ___________ ____________. (Enter one word per blank.)
retained earnings
Expenses are:
the costs of doing business that are necessary to produce revenue
Stockholders' equity is
the owners' claims to resources of the corporation.
Financial Accounting
Accounting information that is provided to external users
True or false: The SEC has delegated the primary responsibility for setting accounting standards to the AICPA.
False
Which financial statement shows the changes in common stock and retained earnings?
Statement of stockholders' equity
The accounting equation is: Assets = Liabilities +
Stockholders' Equity
Quartz Instruments had retained earnings of $145,000 at December 31, 2017. Net income for 2018 was $90,000, and dividends for 2018 were $30,000. What amount of retained earnings should be reported at December 31, 2018?
145,000 + 90,000 - 30,000 = $205,000
Which of the following items are found on a balance sheet? (Select all that apply.)
Assets Liabilities Stockholders' equity
Ending retained earnings appears on the: (Select all that apply.)
- balance sheet - statement of stockholders' equity
Salaries already paid to employees for the month is a(n) ______ account that appears on the ______.
expense; income statement
A(n) ______ is a cost of doing business that is necessary to produce ___.
expense; revenue
To be useful for decision making, information should possess the fundamental qualities of relevance and _____ representation.
faithful
_______ Statements represent a company's primary means of communicating information to external users.
financial
The financial statement that summarizes revenues and expenses for a period of time is the ______ _______
income statement
The functions of financial accounting are
- measure business activities of a company - communicate information about those activities to investors and creditors and other outside users for decision-making purposes.
When revenues are greater than expenses, a company has net _________, whereas when revenues are less than expenses, a company has a net __________
income; loss
Careers for accounting professionals typically include a choice between public and ____________ accounting.
private
The objective of financial accounting is to:
provide useful information for external decision makers
Which of the following appear(s) on the balance sheet?
Accounts receivable Utilities payable Common stock
Creditors
make decisions related to lending money to the company
Financial accounting should provide information that: (Select all that apply.)
- helps to predict cash flows - is useful to investors and creditors in making decisions - tells about economic resources, claims to resources, and changes in resources and claims
Which of the following accounts are stockholders' equity accounts? (Select all that apply.)
Common stock Retained earnings
Reason: The SEC delegated accounting standard setting to _______
FASB
Which of these appears on both the income statement and the statement of stockholders' equity? Revenues Cash Net income Expenses
Net Income
_________ is the amount recorded as a result of the sale of products or services to customers.
Revenue(s)
The form of business organization where an entity is legally separate from its owners and issues shares of stock is a
corporation
When the cost of an item can be traced to objective evidence of a transaction, such as a sales receipt, canceled check, and bank statement, the information has the quality of
verifiability
