Exam 1: Uses of Accounting Information and the Financial Statements

Match each definition with the correct term below. -Corporate governance A.The group of people who are responsible for ensuring that a company meets its goals of profitability and liquidity. B.A unit of ownership in a corporation. C.The inflows and outflows of cash into and out of a business. D.An information system that measures,processes,and communicates financial information about an economic entity. E.A set of practices that has been developed to provide guidelines for financial accounting. F.The value of one currency in terms of another. G.The government body that regulates the issuing,buying,and selling of stocks in the United States. H.The ability to earn enough income to attract and hold investment capital. I.The oversight of a corporation's management and ethics by its board of directors. J.The accumulated earnings generated by a business's income-producing activities less amounts that have been paid out to the stockholder's. k.KEconomic events that affect a business's financial position. L.An examination of a company's financial statements and the accounting systems,controls,and records that produced them.

The unintentional preparation of misleading financial statements is referred to as fraudulent financial reporting.

Accounting ratios are never used as management performance measures.

Match each definition with the correct term below. -Securities and Exchange Commission A.The group of people who are responsible for ensuring that a company meets its goals of profitability and liquidity. B.A unit of ownership in a corporation. C.The inflows and outflows of cash into and out of a business. D.An information system that measures,processes,and communicates financial information about an economic entity. E.A set of practices that has been developed to provide guidelines for financial accounting. F.The value of one currency in terms of another. G.The government body that regulates the issuing,buying,and selling of stocks in the United States. H.The ability to earn enough income to attract and hold investment capital. I.The oversight of a corporation's management and ethics by its board of directors. J.The accumulated earnings generated by a business's income-producing activities less amounts that have been paid out to the stockholder's. k.KEconomic events that affect a business's financial position. L.An examination of a company's financial statements and the accounting systems,controls,and records that produced them.

The measurement stage of accounting is accomplished by

Two major goals of business are to achieve profitability and to achieve liquidity.

Distinguish between profitability and liquidity.

The accounting fees earned by an accounting firm would appear on its balance sheet.

Cochran Corporation's stockholders' equity equals one-third of the company's total assets.The company's liabilities are $240,000.What is the amount of the company's stockholders' equity?

Standards for state and local governments are established by the

Which of the following is an example of an investing activity?

The board of directors of a corporation is responsible for all of the following except

The articles of incorporation may be found in the corporate charter.

Stockholders' equity of a corporation would not show

A major function of management is to provide the accountant with relevant and useful information.

Use the following accounts and balances to prepare a balance sheet for Paulding Company at December 31,2013. Accounts Payable \ 20,000 Common Stock 24,000 Cash 9,600 Retained Earnings, Dec. 31, 2013 4,800 Equipment 26,400 Accounts Receivable 12,800

The Federal Reserve Board is an example of a labor union.

In which form of business does CVS operate? List two places where this would be revealed in the financial statements.

Which of the following is an example of an operating activity?

Palm Textile Corporation had the following balance sheet accounts and balances: Accounts Payable \ 12,000 Common Stock ? Accounts Receivable 2,000 Equipment \ 14,000 Building ? Land 14,000 Cash 6,000 Retained Earnings 4,000 If the balance of the Building account were $28,000 and $6,000 of Accounts Payable were paid in cash,what would be the balance of the Common Stock account?