ACC 210 Exam 1

Businesses engage in what main activity categories?

Financing, Investing, and Operating.

What are examples of external users of financial statements?

IRS, Creditors, and/or Stockholders

What financial statement would be used to analyze and determine the operating performance for the past year?

Income statement.

Revenues are best described as:

Increases in assets resulting from the sale of products or services.

What is an example of a non-external user of financial statements?

A company's president.

The cost of treasury stock is what?

A reduction in stockholders' equity.

The balance in the retained earnings accounts represents what?

Accumulated earnings that have not been distributed to stockholders.

Par value represents what?

An arbitrary amount that establishes a minimum price for the stock when it is first issued.

External events involve exchanges between what parties?

An entity and another entity outside of the company.

What is an example of a liability for a business?

An obligation to pay for goods purchased on credit from a supplier.

Bellarim corporation made cash sales to customers. What effect does this transaction have on the accounting equation?

Assets and retained earnings will increase.

What financial statements show the end of the year cash balance for a business entity?

Balance Sheet and Statement of Cash Flows.

In order for accounting information to be useful in making informed decision, it must be:

Both relevant and reliable.

What is an element of stockholder's equity?

Retaining earnings

Who is responsible for establishing GAAP in the United States?

Securities Exchange Commission (SEC)

What are some examples of forms of business entities?

Sole proprietorship, partnership, and corporations.

The going concern assumption is concerned with:

The company's ability to continue operations long enough to carry out its existing obligations.

Issued shares represent what?

The number of share that a corporation has sold.

During March, Connor Corporation purchase supplies for cash. The supplies will be used in April. What effect does this transaction have on the accounting equation at the time the supplies are purchased?

There is no effect on the accounting equation, as one asset account increases while another asset account decreases.