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