Chapter 1: A Framework for Financial Accounting

The primary functions of accounting are to:

- communicate information to decision makers - measure a company's activity

________ Statements represents a company's primary means of communicating information to external users.

Financial

Ending retained earnings is calculated as

beginning retained earnings + net income - dividends

Companies communicate information about their business activities primarily through

financial statements

The financial statement that summarized the profit-generating activities of a company during a particular period of time is the

income statement

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

retained earnings

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

earned by the corporation

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

1. Income statement 2. Statement of stockholders' equity 3. Balance sheet 4. Statement of cash flows

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

accounting

A business organization that is legally separate from its owners is called a ___________

corporation

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

corporation

Which financial statement reports revenues and expenses

income statement