Financial Accounting

False

Claims of creditors and owners on the assets of a business are called liabilities. True False

True

Corporate stockholders generally pay higher taxes but have no personal liability. True False

revenues exceed expenses.

Net income will result during a time period when expenses exceed revenues. revenues exceed expenses. assets exceed revenues. assets exceed liabilities.

True

Only Certified Public Accountants may perform audits. True False

Assets

Resources owned by a business are referred to as liabilities. assets. stockholders' equity. revenues.

$105,000: First, determine the ending balance of stockholders' equity, which is the sum of the beginning balance of stockholders' equity plus net income less the dividends. $40,000 + $90,000 - $20,000 = $110,000 Then, determine total liabilities by subtracting ending stockholders' equity from total assets. Assets = Liabilities + Stockholders' Equity Liabilities = $215,000 - $110,000 = $105,000

Saira's Maid Service began the year with total assets of $120,000 and stockholders' equity of $40,000. During the year the company earned $90,000 in net income and paid $20,000 in dividends. Total assets at the end of the year were $215,000. How much are total liabilities at the end of the year? $105,000 $90,000 $110,000 $80,000

True

The balance sheet reports assets and claims to those assets at a specific point in time. True False

Financing Activity: The payment of dividends is an example of a financing activity because it is a return on investment to the stockholders.

The payment of dividends is an example of a(n): Financing activity. Operating activity. Investing activity. Delivery activity.

notes to the financial statements.

The segment of a corporation's annual report that describes the corporation's accounting methods is the notes to the financial statements. auditor's report. income statement. management discussion and analysis.

generally receives favorable tax treatment relative to a corporation.

The sole proprietorship form of business organization.... combines the records of the business with the personal records of the owner., is classified as a separate legal entity., must have at least two owners in most states., generally receives favorable tax treatment relative to a corporation.

Expense

What kind of classification is cost of goods sold? Liability Revenue Expense Asset

Investments

Which of the following is an asset? Mortgage payable Retained earnings Investments Common stock

Management discussion and analysis: The management discussion and analysis section addresses favorable or unfavorable trends and identifies significant events and uncertainties affecting a company's ability to pay near-term obligations, ability to fund operations and expansion, and results of operations.

Which section of the annual report presents highlights of favorable or unfavorable trends and identifies significant events and uncertainties affecting a company's ability to pay near-term obligations, and a company's ability to fund operations and expansion? Notes to the financial statements Auditor's report Management discussion and analysis Financial statements

False. Sole proprietorships and partnerships generally receive more favorable tax treatment than corporations.

T/F Corporations generally receive more favorable tax treatment than sole proprietorships and partnerships.

False: Since stockholders are not normally officers, directors, or managers of the company, they are considered external users of accounting information.

T/F Internal users of accounting information include a company's stockholders.

True. Since interest expense is the cost of obtaining operating capital it is properly classified as an expense under operating activities.

T/F: Interest expense is classified under operating activities on the statement of cash flows.

reports the assets, liabilities, and stockholders' equity at a specific date.

The balance sheet summarizes the changes in total equity for a specific period of time. presents the revenues and expenses for a specific period of time. reports the changes in assets, liabilities, and stockholders' equity over a period of time. reports the assets, liabilities, and stockholders' equity at a specific date.

an expense.

The cost of assets consumed or services used is also known as a revenue. an expense. an asset. a liability.

Both the retained earnings statement and the balance sheet.

The ending retained earnings balance appears on The balance sheet only. The income statement and the retained earnings statement. Both the retained earnings statement and the balance sheet. The retained earnings statement only.

a listing of all of the stockholders.

An annual report includes all of the following except an auditor's report. a management discussion and analysis section. a listing of all of the stockholders. notes to the financial statements.

$1,500

As of December 31, 2014, Stoneland Corporation has assets of $3,500 and stockholders' equity of $2,000. How much are the liabilities for Stoneland Corporation as of December 31, 2014? $2,500 $1,000 $1,500 $2,000

False

Net income is another term for revenue. True False

Corporation

Easy transfer of ownership is a characteristic of which form of business organization? Corporation, Sole proprietorship, All of the answer choices are correct, Partnership

to generate revenues.

Expenses are incurred only on rare occasions. to generate revenues. to produce assets. to produce liabilities.

Financing activity

How is the issuance of common stock reported on the statement of cash flows? Financing activity Investing activity Operating activity Marketing activity

International Financial Reporting Standards.

IFRS stand for: International Finance Regulatory Stipulations. International Financial Reporting Standards. International Financial Regulatory Schema. International Fiscal Regulatory Standards.

$10,000 decrease: Assets = Liabilities + Stockholders' Equity, can be used to determine the answer. Therefore, change in assets = ($15,000) + $5,000 = ($10,000)

If total liabilities decreased by $15,000 and stockholders' equity increased by $5,000 during a period of time, then total assets must change by what amount and direction during that same period? $10,000 decrease $20,000 increase $15,000 decrease $10,000 increase

$100,000 increase

If total liabilities increased by $75,000 and stockholders' equity increased by $25,000 during a period of time, then total assets must change by what amount and direction during that same period? $100,000 increase $125,000 increase $150,000 increase $100,000 decrease

operating activities: Since paying salaries is usually part of the everyday operations of the company, it is part of operating activities.

In terms of the principal types of business activities, paying salaries expense is an example of financing activities. advertising activities. investing activities. operating activities.

Sole proprietorships and partnerships

In which forms of business organization are the owners personally liable for all the debts of the business? Sole proprietorships and corporations, Sole proprietorships and partnerships, Partnership and corporation, All of the answer choices are correct

Income statement, retained earnings statement, balance sheet, and statement of cash flows: The financial statements must be prepared in the following order: income statement, retained earnings statement, balance sheet and statement of cash flows. This is because net income (from the income statement) is a required input for the retained earnings statement, ending retained earnings (from the retained earnings statement) is a required input for the balance sheet and the ending cash balance (from the balance sheet) is a required input for the statement of cash flows.

In which of the following sequences are the financial statements usually prepared? Balance sheet, statement of cash flows, income statement and retained earnings statement Balance sheet, retained earnings statement, statement of cash flows, and income statement Income statement, retained earnings statement, balance sheet, and statement of cash flows Income statement, balance sheet, retained earnings statement, and statement of cash flows

False

Information in the notes to the financial statements has to be quantifiable (numeric). True False

$95000

Jackson Company recorded the following cash transactions for the year: Paid $135,000 for salaries. Paid $60,000 to purchase office equipment. Paid $15,000 for utilities. Paid $6,000 in dividends. Collected $245,000 from customers. What was Jackson's net cash provided by operating activities? $35,000 $89,000 $95,000 $110,000

Creditors

Liabilities of a company are owed to debtors. owners. creditors. stockholders.

Operating activities.

Paying interest expense and receiving interest revenue are examples of: Operating activities. Delivery activities. Financing activities. Investing activities.

$110,000: The sum of the beginning balance of stockholders' equity ($40,000) and net income ($90,000) must be reduced by the dividends paid ($20,000) during the period.

Saira's Maid Service began the year with total assets of $120,000 and stockholders' equity of $40,000. During the year the company earned $90,000 in net income and paid $20,000 in dividends. Total assets at the end of the year were $215,000. How much was stockholders' equity at the end of the year? $150,000 $135,000 $130,000 $110,000

claims of owners.

Stockholders' equity represents the difference between revenues and expenses. economics resouces to be used in the future. claims of owners. claims of creditors.

$45,000 (Cash and accounts receivable are not applied to net income, only revenues and expenses)

The financial statements for Harold Corporation contained the following information: Accounts receivable $ 5,000 Sales revenue 75,000 Cash 15,000 Salaries and wages expense 20,000 Rent expense 10,000 How much was Harold's net income? $45,000 $15,000 $65,000 $60,000

GAAP is rules based and IFRS is principles based.

The most common description of IFRS as contrasted to GAAP is that GAAP is principles based and IFRS is rules based. GAAP is rules based and IFRS is principles based. GAAP is principles based and IFRS is concepts based. GAAP is rules based and IFRS is rules based.

False

The notes to the financial statements are not required if a company presents all 4 financial statements. True False

auditor's opinion.

The segment of the annual report that presents an opinion regarding the fairness of the presentation of the financial position and results of operations is/are the financial statements. income statement. auditor's opinion. balance sheet.

False: The statement of cash flows is divided into cash flows from operating activities, investing activities, and financing activities.

The statement of cash flows reports net income, investing, and financing activities. True False

All of the answer choices are correct.

To which of the following questions will internal users want answers? Is cash sufficient to pay dividends to stockholders?, What selling price for our product will maximize the company's net income?, All of the answer choices are correct., Which product line is most profitable?

The investing section: The investing section of the statement of cash flows provides information about property, plant, and equipment accounts.

What section of a cash flow statement shows the cash spent on new equipment during the past accounting period? The investing section The operating section The cash flow statement does not give this information The financing section

unqualified opinion.: A qualified opinion is utilized when the auditor has a limitation of scope within the audit or there is a violation of generally accepted accounting principles.

When the auditor is satisfied that the financial statements provide a fair representation of the company's financial position and results of operation in accordance with generally accepted accounting principles, the auditor will express a disclaimer of opinion. unqualified opinion. an adverse opinion. a qualified opinion.

Balance sheet.

Which financial statement reports assets, liabilities, and stockholders' equity? Balance sheet. Statement of cash flows. Income statement. Retained earnings statement.

Sole proprietorships, corporations, and partnerships

Which forms of business organization are considered to be separate accounting entities? Only corporations, Partnerships and corporations only, Sole proprietorships, corporations, and partnerships, Sole proprietorships and partnerships only

Reduced legal liability for investors

Which is an advantage of corporations relative to partnerships and sole proprietorships? Reduced legal liability for investors, Most common form of organization, Increased difficulty of raising funds, Harder to transfer ownership

Creditorship

Which is not one of the three forms of business organization? Creditorship, Corporation, Sole proprietorship, Partnership

Economic advisors

Which of the following are not considered to be primary users of financial statements in countries outside the U.S.? Economic advisors Central government planners Tax authorities Private investors

Tax rates on corporations increased.

Which of the following did not result from the Sarbanes-Oxley Act? Auditors cannot provide non-audit services to the same client. Tax rates on corporations increased. Top management must now certify the accuracy of financial information. Penalties for fraudulent activity increased.

Issuing shares of common stock

Which of the following is an example of a financing activity? Buying delivery equipment Buying inventory Selling goods on account Issuing shares of common stock

Chief Financial Officer

Which of the following is not an external user of accounting data? Customers, Labor unions, Chief Financial Officer, Economic planners

Advertising

Which of the following is not one of the three primary business activities? Investing Financing Operating Advertising

Top management must certify the financial statements for their company.

Which of the following is required as a result of SOX? Companies that go bankrupt must repay shareholders for loss investments. All shareholders now have an oversight role of the company's financial activities. Top management must certify the financial statements for their company. Public companies must present audited financial statements.

The information system that identifies, records, and communicates the economic events of an organization to interested users

Which of the following is the most appropriate definition of accounting information? A means of collecting information, The information system that identifies, records, and communicates the economic events of an organization to interested users, Electronic collection and organization of vast amounts of financial information, The interconnected network of subsystems necessary to operate a business

Dividends paid: are shown on the retained earnings statement and the statement of cash flows because it relates to ownership rather than operations.

Which of the following would not appear on the income statement? Net income Interest expense Dividends paid Service revenue

Service revenue: Service revenue is reported on the income statement, not on the retained earnings statement.

Which of the following would not appear on the retained earnings statement? Dividends Beginning retained earnings balance Net income Service revenue

Regulatory authorities are considered internal users.

Which statement about users of accounting information is incorrect? Present creditors are considered external users. Taxing authorities are considered external users. Regulatory authorities are considered internal users. Management is considered an internal user.

Balance sheet

Which statement presents information as of a specific point in time? Retained earnings statement Income statement Balance sheet Statement of cash flows

It provides information about an important company resource.

Why are financial statement users interested in the statement of cash flows? It is the easiest financial statement to evaluate. It helps users decide whether assets such as office equipment should be replaced. It provides information about an important company resource. It is the first statement that is presented to users.