Chapter 1
ethics
is a term that refers to a code or moral system that provides criteria for evaluating right or wrong.
Which of the following aspects relate to the information provided in an income statement?
Ability to earn a profit from its operations during the current period
The four financial statements published to provide information to external users include which of the following?
Balance Sheet Income Statement Statement of Stockholders' Equity Statement of Cash Flows
Which of the following financial statements shows a firm's financial position on a particular date?
Balance sheet
Which of the following appear(s) on the balance sheet?
Common stock Utilities payable Accounts receivable
Which of the following appear on the statement of stockholders' equity?
Dividends Net income Beginning balance of retained earnings
Which of these would be found on a company's balance sheet?
Equipment Notes payable Accounts receivable
Which items are found on an income statement?
Expenses Revenues
Which of the following are attributes of FASB?
Full-time board members Private sector organization Independence
The accounting equation is: Assets = ______ + Stockholders' Equity
Liabilities
Which of the following items are found on a balance sheet?
Liabilities Stockholders' equity Assets
According to the conceptual framework, for accounting information to be relevant, what two qualities must it possess?
Predictive value Confirmatory value
Predictive value and confirmatory value are components of which fundamental qualitative characteristic?
Relevance
The accumulated net income earned since the inception of the corporation and not yet paid to shareholders is referred to as
Retained Earnings
Which of the following represents the net income earned by a corporation and not yet paid to shareholders?
Retained earnings
When a company earns net income, its retained earnings:
increase
The accounting equation is: Assets = Liabilities +
Stockholders' Equity
The system that maintains records of a company's operations and then communicates that information to decision makers is referred to as
accounting
Management discussion and analysis and note disclosures to the financial statements are included in the
annual report
The financial statement that displays a firm's financial position on a particular date is the
balance sheet
The purpose of a statement of cash flows is to provide information about the
cash receipts and cash disbursements during a period.
In our society, the two main functions of accounting are to
communicate information to investors and creditors. measure business activities.
A potential disadvantage to a corporation is
double taxation
Stockholders' equity arises primarily from amounts invested by shareholders and amounts
earned by the corporation
Salaries already paid to employees for the month is a(n) ______ account that appears on the ______.
expense; income statement
The three classifications on the statement of cash flows are cash flows from
financing activities. investing activities. operating activities.
Information that best explains companies' stock price performance is reported on the
income statement
The financial statement that is most useful in explaining a company's stock price performance is the
income statement.
In addition to the financial statements, which of the following must be included in the annual reports?
management discussion and analysis. notes disclosures.
The impact of financial accounting information on investors' and creditors' decisions is closely related to the concept of:
materiality
In addition to the financial statements, which of the following must be included in the annual reports?
notes disclosures. management discussion and analysis.
The statement of cash flows classifies items as
operating, investing, and financing.
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.
Profits earned by a company that have not been paid to stockholders are called
retained earnings
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
FASB
the common abbreviation for the Board that currently establishes financial accounting and reporting standards in the U.S.
Retained earnings represents
the total net income earned over the life of the company that has not been distributed as dividends.
