HADM 2230 Financial Accounting Prelim 1 – Flashcards
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Which of the following best describes the time period assumption?
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It assumes we divide the long life of a business into a series of shorter time periods for accounting and reporting purposes
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Revenue realization principle
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1. Delivery has occurred or services have been rendered 2. There is persuasive evidence of an arrangement for customer payment 3. The price is fixed or determinable 4. Collection is reasonably assured
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How are creditor and investor claims reported on a balance sheet?
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The claims of creditors are reported as liabilities while the claims of investors are recorded as stockholders' equity
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Which financial statement would you use to determine a company's earnings performance during an accounting period?
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Income Statement
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What financial statement would you look at to determine the dividends declared by a business?
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Statement of stockholders' equity
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Which of the following are the components of stockholders' equity on the balance sheet? A. Common stock and liabilities. B. Common stock and assets. C. Retained earnings and dividends. D. Common stock and retained earnings.
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D
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The International Accounting Standards Board has worked to develop global accounting standards known as
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International financial reporting standards
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Within which of the following would you find the inventory method(s) being used by a business entity? A. Balance sheet. B. Income statement. C. Notes to the financial statements. D. Headings of the financial statements.
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C
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What assumption implies that a business can continue to remain in operation into the foreseeable future?
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Continuity assumption
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In what order are current assets listed on a balance sheet?
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By liquidity
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Which is the correct sequence of the following steps in the accounting cycle? A. Prepare journal entries, analyze transactions, prepare adjusted trial balance. B. Prepare adjusted trial balance, prepare closing entries, and prepare financial statements. C. Post adjusting journal entries, prepare adjusted trial balance, prepare financial statements. D. Post closing entries, prepare financial statements, prepare adjusted trial balance.
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C
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Which of the following account balances would be closed at year-end by crediting the account? A. Investment revenue. B. Loss on sale of building. C. Sales revenues. D. Unearned revenues.
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B
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Which of the following tasks does the Financial Accounting Standards Board (FASB) perform? A. Overseeing the work of the Securities & Exchange Commission (SEC). B. Overseeing the work of the Public Company Accounting Oversight Board (PCAOB). C. The responsibility for protecting investors and maintaining the integrity of the securities markets. D. The development of generally accepted accounting principles.
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D
