FINAL REVIEW (Ch. 1) – Flashcards

A(n) _________________ changes basic inputs into products that are sold to customers: A) manufacturing business B) service business C) enterprise business D) merchandising business

Which of the following users is not considered an external user of accounting information: A) a creditor B) an investor C) the government D) a manager

Which of the following is not accurate when it pertains to managerial accounting: A) provides economic data reports on the operations and condition of the business that are useful for banks and other creditors in deciding whether to lend money to the business B) uses past information to estimate the planning of future operations C) uses both financial accounting information and estimates in helping managers make daily decisions D) gathers and reports information that is relevant to the decision-making needs of management

Which of the following forms of business entities generates 90% of business revenues in the U.S.: A) partnerships B) manufacturing companies C) corporations D) proprietorships

The principles and concepts that the management of a company uses to record and report its financial information are called: A) GAAP. B) SEC. C) AICPA. D) FASB.

Which of the following statements about GAAP is not true: A) GAAP is a standard set of principles that allows for the comparison of financial performance. B) GAAP allows a company's management to record and report data as it sees fit. C) GAAP impacts how companies report and what they report. D) GAAP are the principles and concepts that the management of a company uses to record and report its financial information.

Emily owns three businesses: a dry cleaner, a market, and a candy store. The dry cleaner has revenue of $5,000; the market has revenue of $10,000; and the candy store has revenue of $7,000. Under the business entity concept, Emily should record: A) $22,000 of revenue in her personal records. B) None of these choices are correct. C) $22,000 of revenue in the records of the market. D) $22,000 of revenue in the records of the dry cleaners.

Liabilities are: A) the rights of owners. B) None of these choices are correct. C) the rights of customers. D) the rights of creditors.

Which of the following best represents the accounting equation: A) Assets = Liabilities - Stockholders' Equity B) Assets + Stockholders' Equity = Liabilities C) Assets + Liabilities = Stockholders' Equity D) Assets = Liabilities + Stockholders' Equity

Stockholders' equity can best be defined as: A) the rights of owners. B) the rights of both owners and creditors. C) the rights of either owners or creditors. D) the rights of creditors.

Assets and liabilities of a company are $150,000 and $30,000, respectively. Determine stockholders' equity using the accounting equation: A) $180,000 B) $30,000 C) $150,000 D) $120,000

The paying of an expense reduces: A) Accounts Payable B) Accounts Receivable C) the amount owed on a liability D) stockholders' equity

Paying an amount on account reduces: A) an expense. B) the amount owed on a liability. C) stockholders' equity. D) net income.

All business transactions can be stated in terms of: A) changes in the elements of the accounting equation. B) None of these choices are correct. C) changes in stockholders' equity. D) changes in cash.

Clayton Company purchased a new coffee maker in the amount of $3,500. Clayton paid $1,000 down and will pay the remainder in 60 days. What effect does this transaction have on the accounting equation: A) $2,500 net increase in assets and $2,500 increase in liabilities B) $1,000 net decrease in assets and $1,000 decrease in liabilities C) $3,500 net increase in assets and $3,500 increase in liabilities D) $3,500 net increase in assets and $2,500 increase in liabilities

The statement that reports net income or loss for a certain period in time is the: A) retained earnings statement. B) income statement. C) statement of cash flows. D) balance sheet.

The statement that provides the financial position of a company as of a specific date is the: A) retained earnings statement. B) income statement. C) statement of cash flows. D) balance sheet.

Which financial statement reports financial data based on the matching concept: A) income statement B) statement of cash flows C) retained earnings statement D) balance sheet

Given the following information, determine Fees Earned. Wages expense equals $4,400; supplies expense equals $2,900; and miscellaneous expense equals $1,250. Net income equals $5,100: A) $8,550 B) $3,450 C) $13,650 D) $5,100