ACC 120 - Chapter 1: The Framework

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Provide services to customers

Operating

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

- Communicate information to creditors and investors - Measure business activities

The primary functions of accounting are to:

- Communicate information to decision makers - Measure a company's activities.

Which of the following knowledge and skills should an accounting professional possess?

- Presentation skills - Technical accounting knowledge - Leadership skills - Ability to work in teams

Which of the following are financial statements?

- Statement of Stockholders' Equity - Balance Sheet - Income Statement

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

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

Land (Property used for operations)

Asset

Equipment (Equipment used for operations)

Assets

The financial statement that is most useful in explaining a company's stock price performance is the

Income Statement

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

Corporation

Economic events can be identified with a particular economic body

Economic entitiy

___ is a term that refers to a code or moral system that provides criteria for evaluating right or wrong.

Ethics

Research and development expense (cost of research and development)

Expense

Utilities Expense (Cost of utilites)

Expense

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

FASB

_____ is the common abbreviation for the Board that currently establishes financial accounting and reporting standards in the U.S.

FASB

Accounting can be defined as a math course (True/False)

False

True or false: Technical accounting skills represent the only skills required of accounting professionals.

False

_____ Statements represent a company's primary means of communicating information to external user

Financial

Companies communicate information about their business activities primarily through

Financial statements

Borrowing from the bank

Financing

Pay dividends to stockholders

Financing

Issue common stock to investors

Finanicing

In the absence of information to the contrary, it is anticipated that a business entity will continue to operate indefinitely.

Going concern

Purchase building

Investing

Purchase land

Investing

Income tax payable

Liability

Interest payable

Liability

Salaries payable (Amounts owed to employees)

Liability

A common denominator is needed to measure all business activates

Monetary unit

Pay rent for the current period

Operating

The economic life of a company can be divided into artificial time intervals for financial reporting

Periodicity

The two main career paths in accounting are referred to as:

Public and private

Service revenue (Sales of services to customers)

Revenue

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

Stockholders have limited liability

Accounting can be defined as a measurement/communication process (True/False)

True

Accounting can be defined as the language of business (True/False)

True

True or false: Accounting professionals enjoy a wide variety of career opportunities.

True

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

accounting

Supplies (Purchase of office supplies)

asset

Information that best explains companies' stock price performance is reported in the ____

income statement

The hierarchy of qualitative characteristics of financial information require that, in order to be useful for decision making, information should possess the fundamental characteristics of

relevance and faithful representation.

Common stock (sale of common stock to investors)

stockholders equity


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