ACC 220 Chapter 1
Profits earned by a company that have not been paid to stockholders are called
Retained earnings
is the amount recorded as a result of the sale of products or services to customers.
Revenue
Ending retained earnings is calculated as
beginning retained earnings + net income - dividends
Stockholders' equity arises primarily from amounts invested by shareholders and amounts ______.
earned by the corporation
True or false: The fundamental activities of a business are selling activities and marketing activities.
false
Selling stock to an investor is a
financing activity
Net income equals:
revenues minus expenses
Revenues are:
sales of goods or services to customers
For a corporation, the owners' claims to the resources of a company are called
stockholders' equity.
Expenses are:
the costs of doing business that are necessary to produce revenue
Stockholders' equity is
the owners' claims to resources of the corporation.
Retained earnings represents
the total net income earned over the life of the company that has not been distributed as dividends.
Which of the following items are assets?
1. Equipment 2. Supplies
In financial accounting which of the following are the three types of business activities of a company?
1. Financing activities 2. Investing activities 3. Operating activities
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 two primary functions of financial accounting are to:
1. Measure business activity 2. Communicate measurements to external parties
Which of the following are operating activities?
1. Paying salaries to employees 2. Providing services to customers 3. Paying advertising expenses
The accumulated net income earned since the inception of the corporation and not yet paid to shareholders is referred to as
1. Retained 2. Earnings
Identify the three most common forms of business organization.
1. Sole Proprietorship 2. Partnership 3. Corporation
Which of the following are financial statements?
1. Statement of stockholders' equity 2. Income statement 3. Balance sheet
The two sources of stockholders' equity are amounts ______.
1. earned by the corporation 2. paid in from shareholders
In our society, the two main functions of accounting are to
1. measure business activities. 2. communicate information to investors and creditors.
The system that maintains records of a company's operations and then communicates that information to decision makers is referred to as
Accounting
Resources owned by a company are called
Assets
The financial statement that displays a firm's financial position on a particular date is the
Balance Sheet
Which of the following financial statements shows a firm's financial position on a particular date?
Balance sheet
Which of the following lends money to a company and expects the company to repay the debt?
Creditor
A(n) ______ is a cost of doing business that is necessary to produce ___. Multiple choice question.
Expense & revenue
Companies communicate information about their business activities primarily through
Financial statements
Borrowing from a bank is a
Financing Activity
Information that best explains companies' stock price performance is reported in the
Income Statement
The financial statement that is most useful in explaining a company's stock price performance is the
Income Statement
The financial statement that summarizes revenues and expenses for a period of time is the
Income Statement
Which financial statement reports revenues and expenses?
Income statement
activities involve the buying and selling of land, buildings, and equipment used in the business.
Investing
Creditor
Lends money to the company
Any amount owed to a creditor is classified in the balance sheet as a
Liability
accounting deals with the concepts and methods used to provide information to an organization's internal users.
Managerial
Revenues minus expenses equals
Net Income
activities involve purchasing goods from suppliers, designing and manufacturing products, and selling products to customers.
Operating
Investors
Own stock in the company
Which of the following is an investing activity?
Paying cash to buy equipment
