Accounting Exam 2

Which financial statement would you utilize to determine whether a company will be able to pay liabilities which are due in 30 days? Statement of stockholders' equity. Statement of cash flows. Income statement. Balance sheet.

Balance sheet

What is the primary scope of the Securities and Exchange Commission (SEC) in the United States? Overseeing the financial reporting of all businesses, regardless of their public or private status. Regulating and requiring financial reporting from public companies while exempting private companies from such regulations. Applying strict regulations to ensure private companies' compliance with financial reporting requirements. Regulating both public and private companies' financial reporting.

Regulating and requiring financial reporting from public companies while exempting private companies from such regulations.

Which organization is responsible for establishing and maintaining the Generally Accepted Accounting Principles (GAAP) for companies in the United States? The Securities and Exchange Commission (SEC). The Financial Accounting Standards Board (FASB). The Internal Revenue Service (IRS). The International Financial Reporting Standards (IFRS).

The Financial Accounting Standards Board (FASB).

Which of the following statements accurately represents a key legal right of debt investors? Debt investors have the legal right to demand both interest and principal payments, and they can "call" the loan if the company fails to make payments on time. Debt investors can only recover their funds by liquidating assets if the company files for bankruptcy. Debt investors can only demand payment of principal, not interest, if the company fails to make timely payments. Debt investors have no legal recourse to "call" the loan and demand payment in case of missed payments.

Debt investors have the legal right to demand both interest and principal payments, and they can "call" the loan if the company fails to make payments on time.

Which of the following statements accurately describes equity investors and debt investors in a business? Equity investors and debt investors are only concerned with the business's profitability and do not have any direct financial interest in the company's operations. Equity investors contribute to the business as owners and benefit from retained earnings, while debt investors are creditors who expect both principal and interest payments. Equity investors and debt investors both contribute to the business as owners and benefit from retained earnings. Equity investors are creditors who provide loans to the business and expect both principal and interest payments, while debt investors contribute to the business as owners and benefit from retained earnings.

Equity investors contribute to the business as owners and benefit from retained earnings, while debt investors are creditors who expect both principal and interest payments.

Which of the following is not an external users of financial accounting information? Factory line manager. Investors. General public. Banks.

Factory Line Manager