Exam 1: Uses of Accounting Information and the Financial Statements

Accountants consider the euro to be the common unit of measure for all business transactions.

Taxing authorities are considered accounting information users with a direct financial interest.

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 $53,000,what would be the total of liabilities and stockholders' equity?

All of the following items would appear on the balance sheet except

Which of the following is the most appropriate and modern definition of accounting?

Match each definition with the correct term below. -Generally Accepted Accounting Principles 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.

Responsibility for ethical financial reporting rests solely with management.

Corporate governance is the oversight of a company's management performance and ethics by its board of directors.

State whether the following business activities are an operating activity,an investing activity or a financing activity. Business Activity Type of Activity 1. Hiring employees 2. Purchasing land 3. Obtaining a loan from a bank 4. Paying off a loan 5. Selling equipment 6. Selling goods and services 7. Issuing stock 8. Paying taxes

The declaration of a dividend will increase net income.

Use this information to answer the following question. Here is the balance sheet for Marron Pickle Company,Inc.: If the balance in the Cash account were used to buy more equipment,then the total assets would

Net income is another term for revenues.

Payment to a creditor is an example of a nonexchange business transaction.

The modern definition of accounting focuses on how to do accounting rather than the role of accounting in making economic decisions.

The statement of cash flows would disclose the purchase of a building for cash

Following are the total assets and liabilities at the beginning and end of the year for Maren Corporation: Assets Liabilities Beginning of the year \ 70,000 \ 45,000 End of the year 130,000 40,000 Determine the net income or loss for the year in each of the following situations: a.The stockholders made no investments in the business and no dividends were paid during the year. b.The stockholders made an investment of $20,000 and a dividend of $12,000 was paid during the year.

List the input(s),the major process(es),and the output(s)of an accounting system.

Reporting to decision makers occurs at which state of the accounting process?

Match each definition with the correct term below. -Profitability 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.

Which of the following financial statements is concerned with the enterprise at a point in time?