Introduction to Business Chapter 8 Review – Flashcards

True or False: The managers of a company are the only stakeholders of a company that have a legitimate interest in its accounting information.

True or False: Generally accepted accounting principles (GAAP) are a set of accounting standards used in the preparation of financial statements.

The major output of financial accounting is a set of statements including the... a)balance sheet, income statement, and statement of cash flows b)general journal, cash budget, and capital budget c)dividend record, auditor's opinion, and master budget d)annual report, social audit, and balanced scorecard

The _____ summarizes a firm's financial position at a specific point in time (i.e., a specific quarter or year). a) statement of cash flows b)income statement c)balance sheet d)investment income statement

All of the following are assets EXCEPT... a)cash b)inventory c)salaries payable d)buildings

What is the accounting equation? a)assets=liabilities - owner's equity b)liabilities = assets + owner's equity c) assets = liabilities + owner's equity d)assets = liabilities + potential

A firm's current liabilities... a) are what it owes to its shareholders b)are due to lenders in less than a year c)

The _____ indicates whether a firm earned a profit or suffered a loss over the past accounting period. a)balance sheet b)income statement c)statement of cash flows d)cash budget

Which item would be listed first on the income statement? a)revenue b)cost of goods sold c)net operating income d)retained earnings

What two pieces of information are arguably the most important to any business? a) cash flow--how and why it changes b)compliance with government regulators and the report of an independent auditor c)retained earnings and disbursements d)financing activities and operating activities