SB CHP.2 ACCY 200 EXAM 1

The balance sheet is a listing of the organization's:

assets, liabilities, and stockholders' equity

Companies are not allowed to switch back and forth between alternative accounting methods from year to year because of the ___________ concept.

consistency

An entity's earnings for a reporting period are reported on the:

income statement

If the total assets is equal to $10,000, and the total stockholders' equity is equal to $3,000, then:

the total liabilities is equal to $7,000

The four concepts/principles that relate to bookkeeping procedures and the accounting process are:

accounting period, matching, revenue recognition, and accrual

The matching concept means that:

expenses incurred to generate revenues must be matched to revenues earned for any given period

A firm prepares comparative financial statement so that _____.

the users of the data can easily spot changes in the firm's financial position and in its results of operations

Which of the following statements is true regarding what each financial statement of an entity reports?

-The statement of cash flows reports the entity's cash flows during a period. -The income statement reports an entity's earnings for a period. -The balance sheet reports an entity's financial position at the end of a period.

Which of the following items are normally included as key components of a corporation's annual report?

-A five-year (or longer) summary of key financial data -The report of the external auditor's examination of the financial statements -The notes to the financial statements

Which of the following are the required financial statements under generally accepted accounting principles and auditing standards?

Statement of cash flows Income statement Statement of changes in stockholders' equity Balance sheet

The four concepts/principles that relate to the financial statements are:

consistency, full disclosure, materiality, and conservatism

The investments by and distributions to owners during a reporting period are reported on the:

statement of stockholders' equity

A corporation's annual report contains the reporting firm's financial statements and each of the following key components, except:

the reporting firm's operating budget for the next fiscal year

The balance sheet equation:

is another term for the accounting equation. must remain in balance after each transaction is recorded. can be expressed as A = L + SE

If the total liabilities is equal to $8,000 and the total stockholders' equity is equal to $4,000, then:

the total assets is equal to $12,000

________________ principle in accounting relates to making judgments and estimates that result in lower profits and asset valuation estimates rather than higher profits and asset valuation estimates.

Conservatism

Identify the information that the current generally accepted accounting principles and auditing standards require the financial statements of an entity to show for the reporting period.

Earnings for the period Cash flows during the period Financial position at the end of the period Investments by and distributions to owners (i.e., stockholders) during the period

Which of the following concepts/principles relate to the entire model?

Going concern Accounting entity Accounting equation

Which of the following items are normally included as key components of a corporation's annual report?

Highlights for the year, including net revenues, diluted earnings per share, and return of stockholders' equity Management's discussion and analysis of the financial statements The reporting firm's financial statements for the year

Which of the following concepts/principles relate to financial statements?

Materiality Conservatism Consistency Full disclosure

The three concepts/principles that relate to the entire model are:

accounting equation, accounting entity, and going concern

An entity's financial position at the end of a reporting period is reported on the:

balance sheet

Financial statements that show a column for the current year and the prior year are known as _________ financial statements.

comparative

The ___________ concept requires that the financial statements and notes include all necessary information to prevent a reasonably astute user of the financial statements from being misled.

full disclosure

The idea that tells absolute exactness in the amounts shown in the financial statements is not necessary is portrayed by the concept of _____.

materiality

_________means that absolute exactness is not necessary in the amounts shown in the financial statements.

materiality

If the total assets is equal to $15,000 and the total liabilities is equal to $9,000, then:

the total stockholders' equity is equal to $6,000.

Providing more (rather than less) detail in the notes to the financial statements is driven by which of the following concepts/principles?

Full disclosure