Exam 1: Uses of Accounting Information and the Financial Statements

A proper heading for the income statement could include "For the Year Ended December 31, 20xx."

Distinguish between profitability and liquidity.

One user of accounting information with an indirect financial interest in a business is

Only about 10 percent of the U.S. economy is generated by governmental and not-for-profit organizations.

The Public Company Accounting Oversight Board (PCAOB) was created to determine the standards that auditors must follow.

Both public accountants and management accountants are required to adhere to a code of professional conduct.

A net loss results when owner's withdrawals exceed net income.

Earned income is a measure of profitability.

The statement of cash flows discloses significant events related to the operating, investing, and financing activities of a business.

The stockholders of a corporation elect the board of directors.

Use the following information to calculate at, or for the year ended, December 31, 2010, (A) net income,(B) owner's capital,(C) total liabilities and owner's equity, and(D) accounts receivable. Supplies 1,000 Cash \ 32,000 Wages Expense 14,000 Withdrawals 16,000 Accounts Payable 22,000 Notes Payable 4,000 Owner's Capital, Land 7,000 December 31, 2009 28,000 Owner's Capital, Accounts Receivable ? December 31, 2010 ? Rent Expense 6,000 Commissions Earned 30,000

Taxing authorities are considered accounting information users with an indirect financial interest.

Standards for state and local governments are established by the

Fraudulent financial reporting can result from the misapplication of accounting principles.

The Federal Reserve Board is an example of an economic planner.

A company's management information system is a subsystem of its accounting information system.

Financial accounting information is used primarily by management.

Which of the following assets could be described as nonphysical?

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

Net assets equal assets plus liabilities.