ACCT200 Chapter 1 – Flashcards
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Which of the following financial statements would be included in an annual report?
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All of the financial statements
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An owner who wants to have limited liability should form which type of business enterprise?
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A corporation
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Which of the following is true of a partnership?
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A partnership must have more than one owner.
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Accounting activities
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require identifying and reporting economic events.
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Analysis of an ethical case is done by
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identifying all of the stakeholders and how alternatives impact each.
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Ginni founded Waggstooth Manor Doggie Day Care and after a year in business, formed a partnership with her husband, Warren. Their friend, Phebe, is a shareholder with Networth Bank. In terms of personal liability, who is at greater risk? Why?
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Ginni and Warren, because both partners have unlimited personal liability, regardless of who owns a larger percentage of the company.
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Which of the following statements about accounting information is true?
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Accounting communicates financial information about a business enterprise to both internal and external users.
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Ethics are the principles of conduct that are used to judge whether decisions are
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right/wrong, honest/dishonest, moral/immoral
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The main purpose of operating activities is to
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generate revenue to increase profits.
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When a company borrows money from a bank to purchase equipment, this action is called
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a financing activity
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Companies can borrow money if they need a source of outside funds. Borrowing money is called
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debt financing
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Purchasing resources that a company needs in order to operate is called a(n) ________ activity.
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investing
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If a company purchases plastic that they will melt and form into milk jugs that they will then sell to milk plants, the cost of the plastic will be categorized as what type of expense?
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cost of goods sold
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What is the primary purpose of the statement of cash flows?
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to provide information about cash receipts and cash payments
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To keep the accounting equation in balance, an increase in an asset may be matched with a(n)
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decrease in another asset.
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At the beginning of the year, Tektron Company had total assets of $600,000 and total liabilities of $300,000. If the total assets increased $100,000 and the total liabilities decreased $70,000, what is the amount of stockholders' equity at the end of the year?
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$470,000
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Sheldon has the following year-end account balances: Accounts Receivable, $5,000; Supplies, $12,000; Equipment, $18,000; Accounts Payable, $17,000; Stockholders' Equity, $43,000. The Cash account balance was not available at year-end. Given the account balances listed, the balance in the Cash account should be
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$25,000
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Which financial statement summarizes the financial position of a company?
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balance sheet
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Torres Travel's stockholders' equity at the beginning of March 2014 was $200,000. During the month, the company earned net income of $50,000 and paid dividends of $10,000. At the end of March 2014, what is the amount of stockholders' equity?
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$240,000
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Tonelli Trucking buys a $65,000 truck on credit. Which financial statement will be affected by this transaction?
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balance sheet only
