accounting quiz 1

Which of the following aspects relate to the information provided in an income statement?

Ability to earn a profit from its operations during the current period

Using the accounting equation, stockholders' claims on the resources of the corporation can be expressed as

Assets - Liabilities.

Which of the following is the accounting equation?

Assets = Liabilities + Stockholders' equity

The four financial statements published to provide information to external users include which of the following?

Balance Sheet Income Statement Statement of Stockholders' Equity Statement of Cash Flows

Which of the following financial statements shows a firm's financial position on a particular date?

Balance sheet

Which of the following appear(s) on the balance sheet?

Common stock Accounts receivable Utilities payable

Which of these would be found on a company's balance sheet? (Select all that apply.)

Equipment Notes payable Accounts receivable

The private sector organization that is currently responsible for setting accounting standards in the United States is the

FASB

________ _________ represent a company's primary means of communicating information to external users.

Financial statements

Which of the following appear on the statement of stockholders' equity?

Net income Dividends Beginning balance of retained earnings

Which of the following items are reported on the balance sheet as liabilities?

Notes payable Wages and salaries payable

________________ activities involve purchasing goods from suppliers, designing and manufacturing products, and selling products to customers.

Operating, operations, or operational

Which of the following is an investing activity?

Paying cash to buy equipment

Which of the following are attributes of FASB? (Select all that apply.)

Private sector organization Full-time board members Independence

Which of the following are operating activities?

Providing services to customers Paying salaries to employees Paying advertising expenses

Which of the following items are assets? (Select all that apply.)

Supplies Equipment

The system that maintains records of a company's operations and then communicates that information to decision makers is referred to as _____________.

accounting

The system that maintains records of a company's operations and then communicates that information to decision makers is referred to as _________________. (Enter one word per blank)

accounting

A company owns an economic resource that will provide it with future benefits. This economic resource is

an asset

Resources owned by a company are called

assets

The financial statement that reflects the accounting equation is referred to as the

balance sheet

The purpose of a statement of cash flows is to provide information about the

cash receipts and cash disbursements during a period.

A business organization that is legally separate from its owners is called a(n) _________________. (Enter one word per blank)

corporation

The form of business organization where an entity is legally separate from its owners and issues shares of stock is a

corporation.

The balance sheet shows that a company's resources equal _____ claims to those resources.

creditors claims plus owners'

A(n) ___________ is a distribution of net income to the stockholders of a corporation. (Enter one word per blank)

dividend

Salaries already paid to employees for the month is a(n) ______ account that appears on the ______.

expense; income statement

A(n) ______ is a cost of doing business that is necessary to produce ___.

expense; revenue

Companies communicate information about their business activities primarily through

financial statements.

Borrowing from a bank is a(n)

financing activity.

Selling stock to an investor is a(n):

financing activity.

The income statement is considered most useful for predicting

future profitability.

The purpose of a(n) _______ ________is to report the profit-generating activities of the firm during a period of

income statement

The purpose of a(n)_______ _________ is to report the profit-generating activities of the firm during a period of time.

income statement

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

income statement

Amounts owed to creditors are

liabilities.

Revenues minus expenses equals

net income

________________ activities involve purchasing goods from suppliers, designing and manufacturing products, and selling products to customers.

operating

The three classifications on the statement of cash flows are cash flows from (Select all that apply.)

operating activities. investing activities. financing activities.

The statement of cash flows classifies items as

operating, investing, financing

An advantage of the corporate form of organization is that a corporation:

provides limited liability to stockholders.

_______________ is the amount recorded as a result of the sale of products or services to customers.

revenue

Revenues are:

sales of goods or services to customers

The financial statement that provides information about cash receipts and cash disbursements for the period is the

statement of cash flows.

For a corporation, the owners' claims to the resources of a company are called:

stockholders' equity.

Which items are found on an income statement?

Revenues Expenses

A distribution of net income to owners is called a(n)

dividend.

Stockholders' equity arises primarily from amounts invested by shareholders and amounts ______.

earned by the corporation

Expenses are:

the costs of doing business that are necessary to produce revenue

Stockholders' equity is

the owners' claims to resources of the corporation.

True or false: Financial accounting information helps investors assess the profitability of companies.

true

Margot starts a new business and contributes $20,000 in cash; she also borrows $25,000 from her local bank. She Utilizes the cash to purchase supplies for $5,000 and a computer system for $10,000. After these transactions,the companies total resources are:

Reason: The cash is exchanged for other resources so the total resource amount is $45,000. cash ($20,000 + $25,000 - $5,000 - $10,000) + equipment $10,000 + supplies $5,000 = $45,000

___________________ activities involve the buying and selling of land, buildings, and equipment used in the business. (Enter one word per blank)

investing or investment

The primary functions of accounting are to:

measure a company's activities. communicate information to decision makers.

Net income equals:

revenues minus expenses