Accounting Final (Chapters 1-12)

London Corp. issues 1,000 shares of stock for $20 per share. What are the effects of this transaction? Cash is increased. Cash is decreased. Revenue is increased. Common stock is increased.

Cash is increased. Common stock is increased.

According to the conceptual framework, for accounting information to be relevant, what two qualities must it possess?

Confirmatory value Predictive value

Predictive value

Consistently increasing income helps forecast the company's ability to generate future cash.

Which of the following appear on the statement of stockholders' equity? Net income Property, plant, and equipment Dividends Beginning balance of retained earnings Cash received during the accounting period

Net income Dividends Beginning balance of retained earnings

Undistributed profits that have accumulated in the company over time are called:

Retained Earnings

Management discussion and analysis and note disclosures to the financial statements are included in the

annual report

Revenues cause retained earnings to

increase

In addition to the financial statements, which of the following must be included in the annual reports?

notes disclosures. management discussion and analysis.

The accumulated net income earned since the inception of the corporation and not yet paid to shareholders is referred to as

retained earnings

Which of the following appear(s) on the balance sheet? Accounts receivable Salaries expense Common stock Net income Utilities payable

Accounts receivable Common stock Utilities payable

Which of these would be found on a company's balance sheet? Equipment Accounts receivable Notes payable Sales revenue Depreciation expense

Equipment Accounts receivable Notes payable

Confirmatory value

Positive income is consistent with effectiveness of management.

Predictive value and confirmatory value are components of which fundamental qualitative characteristic?

Relevance

Which of the following are stockholder equity accounts? Retained earnings Notes payable Common stock Inventory Accounts receivable

Retained earnings Common stock

The two components of stockholders' equity are

common stock and retained earnings

The statement used to predict future profitability and a company's future cash-generating ability is the

income statement

The two sources of stockholders' equity are amounts:

paid in from shareholders earned by the corporation

The types of accounts which affect retained earnings are

revenues. dividends. expenses.

The purpose of an income statement is to:

summarize the profit-generating activities that occurred during a particular reporting period

A list of all accounts and their balances at a particular date showing that debits equal credits is referred to as a(n)

trial balance