Intro to Financial Statement – Chp 1 Q&A – Flashcards
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If the retained earnings account increases from the beginning of the year to the end of the year, then
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net income is greater than dividends.
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The retained earnings statement shows all of the following except
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the time period following the one shown for the income statement
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Which of the following is not one of the three forms of business organization?
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Investors
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The cost of assets consumed or services used is also known as
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an expense.
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If total liabilities increased by $69,000 during a period of time and stockholders' equity decreased by $27,000 during the same period, then the amount and direction (increase or decrease) of the period's change in total assets is a(n)
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$42,000 increase. (69,000-27000)
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Which of the following activities involves collecting the necessary funds to support the business?
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Financing
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IFRS GAAP, compared to IFRS, tends to be more
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rulesbased.
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IFRS Financial accounting ethics violations are
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a major problem both in the U.S and internationally.
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Common stock is reported on the
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balance sheet.
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Which of the following financial statements is concerned with the company at a point in time?
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Balance sheet
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The best definition of assets is the
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resources belonging to a company that have future benefit to the company.
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A small neighborhood barber shop that is operated by its owner would likely be organized as a
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proprietorship.
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Which of the following groups uses accounting information to determine whether a marketing proposal will be cost effective?
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Marketing managers
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IFRS The conceptual framework that underlines IFRS
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is very similar to that used to develop GAAP.
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The retained earnings statement
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summarizes the changes in retained earnings for a specific period of time.
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To show how successfully your business performed during a period of time, you would report its revenues and expenses in the
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income statement.
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Which of the following is not a liability?
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Accounts Receivable
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Liabilities
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are debts and obligations.
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Expenses are incurred
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to generate revenues.
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IFRS International standards are developed by the
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IASB
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Ashley's Accessory Shop started the year with total assets of $210,000 and total liabilities of $120,000. During the year the business recorded $330,000 in revenues, $165,000 in expenses, and dividends of $60,000. The net income reported by Ashley's Accessory Shop for the year was...
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165,000 Ending Revenue - Expenses (330000-165000)
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Payments to stockholders are called
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dividends.
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A corporation has which of the following set of characteristics?
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Easier to transfer ownership and raise funds, no personal liability
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Which of the following is the best definition of an internal user of accounting information?
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Managers who use accounting information to plan, organize, and run a business.
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The balance sheet
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reports the assets, liabilities, and stockholders' equity at a specific date.
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The heading on the statement of cash flows identifies all of the following except
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the preparer of the statement
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Which of the following would not be considered an internal user of accounting data for a company?
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Creditor of a company
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The common characteristic possessed by all assets is
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future economic benefit.
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Debt securities sold to investors that must be repaid at a particular date some years in the future are called
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bonds payable.
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Buying and selling products are examples of
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operating activities.
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Which activities involve putting the resources of the business into action to generate a profit?
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Operating
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All of the following are advantages for choosing a proprietorship for a business except
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transfer of ownership is easily achieved through stock sales
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Liabilities of a company are owed to
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creditors
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Jimmy's Repair Shop started the year with total assets of $300,000 and total liabilities of $240,000. During the year the business recorded $630,000 in revenues, $330,000 in expenses, and dividends of $60,000. The net income reported by Jimmy's Repair Shop for the year was
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$300,000. Ending Revenues - Expenses (630,000-330,000)
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Most business enterprises in the United States are
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proprietorships and partnerships
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Which of the following is not a step for solving an ethical dilemma?
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Certifying the ethical accuracy of the financial information Five Steps to resolving an ethical dilemma. 1. Identify the facts 2. Identify relevant values and concepts 3. Identify all possible moral dilemmas for each party involved 4. Decide which is the immediate moral or ethical being faced 5. Resolve the dilemma by using an ethical system or other means of decision making.
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The financial statement that summarizes the changes in retained earnings for a specific period of time is the
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retained earnings statement.
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Which of the following activities involves collecting the necessary funds to support the business?
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Financing
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An advantage of the corporate form of business is tha
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its ownership is easily transferable via the sale of shares of stock.
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IFRS IFRS, compared to GAAP, tends to be more
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principles-based.
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Benedict Company compiled the following financial information as of December 31, 2017: Service Revenue: 1,120,000 Common Stock 240,000 Equipment 320,000 Operating Expenses 1,000,000 Cash 280,000 Dividends 80,000 Supplies 40,000 A/P 160,000 A/R 120,000 Retained Earnings, 1/1/17 :600,000 Benedict's retained earnings on December 31, 2017 are
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640,000 Solution: Beginning Retained Earning+(Service Revenue- Operating Expenses)- Dividens 600,000+(1,120,000-1,000,000)-80,000
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Resources owned by a business are referred to as
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assets.
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If the retained earnings account increases from the beginning of the year to the end of the year, then
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net income is greater than dividends
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Which of the following statements is not true regarding the Sarbanes-Oxley Act (SOX)?
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The Act calls for decreased independence of outside auditors reviewing corporate financial statements.
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The statement of cash flows would disclose the payment of a dividend
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in the financing activities section.
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A business organized as a separate legal entity is a
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corporation.
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International standards are developed by the
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IASB.
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IFRS The United States and the international standard-setting environment are primarily driven by meeting the needs of
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investors and creditors.
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Why are financial statement users interested in the statement of cash flows?
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It provides information about an important company resource.
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Issuing shares of stock in exchange for cash is an example of a(n)
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financing activity.
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Lankston Company began the year by issuing $120,000 of common stock for cash. The company recorded revenues of $1,100,000, expenses of $960,000, and paid dividends of $60,000. What was Lankston's net income for the year?
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$140,000 Revenue - expense (1,100,000-960,000)
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Which of the following are internal reports that accounting provides to internal users?
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Both forecasts of cash needs and financial comparisons are internal reports.
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Benedict Company compiled the following financial information as of December 31, 2017: Service Revenue: 1,120,000 Common Stock 240,000 Equipment 320,000 Operating Expenses 1,000,000 Cash 280,000 Dividends 80,000 Supplies 40,000 A/P 160,000 A/R 120,000 Retained Earnings, 1/1/17 :600,000 Benedict's stockholders' equity on December 31, 2017 is
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880,000 240,000+[600,000+(1,120,000-1,000,000)-80,000] Common Stock+[Retained Earning+(service revenue-operating expenses)-Dividens]
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Which type of corporate information is not available to investors?
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Forecast of cash needs for the upcoming year
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Which of the following is not an advantage of the corporate form of business organization?
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Favorable tax treatment
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Management's views on the company's shortterm debt paying ability, expansion financing, and results of operations are found in the
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management discussion and analysis section.
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Gilkey Corporation began the year with retained earnings of $310,000. During the year, the company issued $420,000 of common stock, recorded expenses of $1,200,000, and paid dividends of $80,000. If Gilkey's ending retained earnings was $330,000, what was the company's revenue for the year?
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1,300,000 Beg. bal. $310,000 + revenue ?? - expenses $1,200,000 - dividends $80,000 = Ending bal. $330,000 You can work out revenue to be $1,300,000
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Henson Company began the year with retained earnings of $380,000. During the year, the company recorded revenues of $500,000, expenses of $380,000, and paid dividends of $40,000. What was Henson's retained earnings at the end of the year?
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460,000 380,000+(500000-380000)-40000
