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financial accounting ch.1
Terms in this set (36)
Which of the following is not one of the forms of business organization?
creditorship. the three are corporation, partnership, and sole proprietorship
Easy transfer of ownership is a characteristic of which form of business organization?
Which statement about users of accounting information is correct?
Taxing authorities are considered external users.
external v internal
internal users are employees, such as marketing, management, finance, human resources. external users are stock or share holders or credits, such as an investor.
Which of the following is the most appropriate definition of accounting information?
The information system that identifies, records, and communicates the economic events of an organization to interested users
Which of the following is required ever since the Sarbanes-Oxley Act (SOX) passed into law in 2002?
Top management must certify the financial statements for their company.
Which of the following is an expense?
Cost of goods sold
In terms of the principal types of cash flow activities, paying for goods and services is an example of
an operating activity.
the three types of activity
financing, operaring, investing
The payment of dividends is an example of
Paying cash to buy stocks or bonds of another company is an example of
Which of the following is also referred to as debt?
Which of the following would not appear on an income statement?
dividends- which are on retained earnings statement
Net income will result during a time period when
revenues exceed expenses
The ending balance of the Retained Earnings account appears on
both the retained earnings statement and the balance sheet. not on the income statement
Which financial statement presents information as of a specific point in time?
balance sheet, the income statement, retained earnings, nd cash flow are for a period of time
The income statement
presents the revenues and expenses for a specific period of time.
A company borrows money from a bank. It should report the cash received from the bank on its statement of cash flows as
What section of a cash flows statement shows the amount of cash spent on new equipment acquired during the most recent accounting period?
Chris's Maid Service began the year with total assets of $100,000 and stockholders' equity of $40,000. During the year the company earned $110,000 in net income and paid $5,000 in dividends. Total assets at the end of the year were $240,000. How much are total liabilities at the end of the year?
first- ending SE= beginning SE+net income-dividends
$40,000 + 110,000 - 5,000 = $145,000.
$240,000 - 145,000 = $95,000.
If total liabilities decreased by $10,000 and total assets decreased by $5,000 during a period of time, then total stockholders' equity must have changed by what amount and direction during that same period?
Which of the following best describes stockholders' equity?
Stockholders' equity are the claims of owners.
At the end of the year, Stoneland Corporation has liabilities of $3,500 and equity of $2,000. How much are the company's assets at the end of the year?
Which section of the annual report presents highlights of favorable or unfavorable trends and identifies significant events and uncertainties affecting a company's ability to pay near-term obligations, and a company's ability to fund operations and expansion?
Management discussion and analysis
When the auditor is satisfied that the financial statements provide a fair representation of the company's financial position and results of operation in accordance with generally accepted accounting principles, the auditor will express
an unqualified opinion.
The sole proprietorship form of business organization
generally receives favorable tax treatment relative to a corporation.
Which of the following is an advantage of corporations relative to partnerships and sole proprietorships?
It is generally easier to sell or transfer ownership of a corporation
Which of the following is not an external user of accounting data?
chief financial officer (employee)
The cost of assets consumed or services used is also known as
A company paying cash to its suppliers for inventory to be sold to its customers is an example of
What type of account or account classification is Cost of Goods Sold?
the balance sheet
reports the assets, liabilities, and stockholders' equity at a specific date.
A business that raises money by issuing stock.
Cost of goods sold, Income tax expense, Selling and administrative expenses, Interest expense
In what area of the annual report would be information about interest rates that the company is being charged on outstanding debts and their due dates?
Notes to the financial statements
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