Accounting Test Chapter 1
Which of the following statements is NOT correct about the financial statements?
A balance sheet reports assets, liabilities, revenues, and expenses.
The accounting equation is defined as
Assets = Liabilities + Stockholders' Equity
The balance sheet depicts which of the following equations?
Assets = liabilities + stockholders' equity.
Which of the following financial statements reports a company's retained earnings?
Balance sheet.
Which of the following accounts appears in the statement of stockholders' equity?
Common Stock.
The form of business organization that is legally separate from its owners is a
Corporation
GAAP is an abbreviation for:
Generally Accepted Accounting Principles
Net income (loss) appears in which two financial statements?
Income statement and statement of stockholders' equity.
Creditors' claims to a corporation's resources are referred to as
Liabilities
What is the primary purpose of financial accounting?
Measure business transactions and communicate those measures to external users to make decisions.
Which of the following items is reported in the statement of stockholders' equity?
Net income
Net income can best be described as
Revenues - Expenses
Which of the following best explains the meaning of total stockholders' equity?
The amount of capital invested by stockholders plus profits retained over the life of the company.
If a company has stockholders' equity of $60,000 at the end of the year, which of the following statements must be true?
The company's assets exceed liabilities by $60,000.
Which of the following items would not appear in an income statement?
accounts payable
The accounts that represent the resources of the company are called
assets
The costs of providing goods and services to customers are referred to as
expenses
Which accounting number has the single greatest impact on stock prices?
net income
