ACCT Chapter 1

A code or moral system that provides criteria for evaluating right and wrong is referred to as

ethics

Balance Sheet Equation

Assets = Liabilities + Stockholders' Equity + Retained Earnings

The accounting equation is: Assets = ______ + Stockholders' Equity.

Liabilites

The statement of cash flows classifies items as

operating, investing, and financing.

Costs of selling products or services.

Expenses selected

Which of the following are attributes of FASB?

Independence, Full-time board members, Private sector organization

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

Notes payable, Accounts receivable, Equipment

Sales of products or services.

Revenue

The impact of financial accounting information on investors' and creditors' decisions is closely related to the concept of:

materiality

Which items are found on an income statement?

revenues, expenses

Retained earnings represents

the total net income earned over the life of the company that has not been distributed as dividends.

Ending retained earnings is calculated as

Retained Earnings = All net income − All dividends

Owners' claims to resources.

Stockholders' equity

Which of the following items are found on a balance sheet?

Stockholders' equity, Assets, Liabilities

Resources of a company.

Assets

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

annual report

Faithful representation requires information to have which of the following three characteristics?

completeness, Neutrality, Free from material error

Faithful representation requires that information is complete, neutral, and

free-from-material error

The financial statement that summarizes the profit-generating activities of a company during a particular 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.

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

investing activities., financing activities., operating activities

The characteristic that a new accounting standard should not favor one group of companies over others or achieve a particular social outcome is an example of

neutrality

Which qualitative characteristic requires that financial information should not influence decision making to achieve a predetermined result?

neutrality

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

notes disclosures, management discussion and analysis.

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

relevance

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

statement of cash flows

The purpose of an income statement is to:

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

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

Cash Statement

Statement of Cash Flows Equation

Cash flows from operating activities + cash flows from investing activities + cash flows from financing activities = change in cash

To be useful for decision making, information should possess the fundamental qualities of relevance and representation.

Faithful representation.

Undistributed profits that have accumulated in the company over time are called (Enter only one word.)

Retained earnings

The two sources of stockholders' equity are amounts

paid in from shareholders earned by the corporation

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

Balanced Sheet

Retained Earnings Equation

Beginning Retained Earnings + Net Income - Dividends = Ending Retained Earnings

Statement of Stockholders' Equity Equation

Beginning Retained Earnings + Net Income - Dividends = Ending Retained Earnings

Distributions to stockholders.

Dividends selected

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

FASB

Amounts owed.

Liabilities

Confirmatory value Predictive value

Positive income is consistent with effectiveness of management. Consistently increasing income helps forecast the company's ability to generate future cash.

Financial information that is immaterial in amount or nature need not be reported under GAAP.

True

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

Utilities payable Common stock Accounts receivable

In our society, the two main functions of accounting are to

communicate information to investors and creditors., measure business activities.