Unit 1 Accounting – Flashcards
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Generally accepted accounting principles are the basic assumptions, concepts, and guidelines for preparing financial statements.
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True
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The area of accounting aimed at serving the decision making needs of internal users is:
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Managerial accounting
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The basic financial statements include all of the following except:
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Trial Balance
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Owner's equity is increased when cash is received from customers in payment of previously recorded accounts receivable.
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False
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A balance sheet covers a period of time such as a month or year.
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False
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The income statement reports all of the following except:
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Assets owned by a business
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The accounting principle that requires accounting information to be based on actual cost and requires assets and services to be recorded initially at the cash or cash-equivalent amount given in exchange, is the:
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Cost Principle
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Managerial accounting is the area of accounting that provides internal reports to assist the decision making needs of internal users.
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True
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Bookkeeping is the recording of transactions and events and is only part of accounting.
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True
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Ethical behavior requires:
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That auditors' pay not depend on the success of the clients business
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Accounting is an information and measurement system that identifies, records, and communicates relevant, reliable, and comparable information about an organization's business activities.
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True
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Assets are the resources of a company and are expected to yield future benefits.
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True
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The three common forms of business ownership include sole proprietorship, partnership, and non-profit.
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False
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The accounting equation implies that: Assets + Liabilities = Equity.
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False
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A company's balance sheet shows: cash $24,000, accounts receivable $30,000, equipment $50,000, and equity $72,000. What is the amount of liabilities?
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32,000
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Owners of a corporation are called shareholders or stockholders
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True
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Flash reported net income of $17,500 for the past year. At the beginning of the year the company had $200,000 in assets and $50,000 in liabilities. By the end of the year, assets had increased to $300,000 and liabilities were $75,000. Calculate its return on assets:
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7.0%
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Every business transaction leaves the accounting equation in balance.
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True
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The primary objective of financial accounting is to provide general purpose financial statements to help external users analyze and interpret an organization's activities.
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True
