Ch. 1

Question 1

Three primary forms of business organization are

Answer 1

sole proprietorship, the partnership, and the corporation.

Question 2

Measures income according to the transactions related to providing goods and services regardless of when cash is received or paid.

Answer 2

Accrual Accounting

Question 3

Measures income as the differences between cash receipts and cash disbursements during a reporting period from transactions related to providing goods and services.

Answer 3

Cash-basis accounting

Question 4

Net operating cash flow

Answer 4

difference between cash reciepts and cash disbursements from providing goods/services

Question 5

Fundamental Qualitative Characteristics (2)

Answer 5

Relevance & Faithful Representation

Question 6

Enhancing Qualitative Characteristics (4)

Answer 6

Comparability, Verifiability, Timeliness, & Understandability

Question 7

What is the order of financial statements?

Answer 7

Income statement
Statement of Equity
Balance Sheet
Statement of Cash Flow

Question 8

What is the basic accounting equation

Answer 8

Assets = Liability + Equity

Question 9

What is the basic accounting equation

Answer 9

Assets = Liability + Equity

Question 10

Normal Balance of Dividends

Answer 10

Debit

Question 11

Normal Balance of Expenses

Answer 11

Debit

Question 12

Normal Balance of Assets

Answer 12

Debit

Question 13

Normal Balance of Liability

Answer 13

Credit

Question 14

Normal Balance of Equity

Answer 14

Credit

Question 15

Normal Balance of Revenue

Answer 15

Credit

Question 16

Total Comprehensive Income

Answer 16

Net Income/Loss

+ Other comprehensive Income

Question 17

Examples of Other Comprehensive Income

Answer 17

1. Foreign Translation adjustments
2. Unrealized gains/losses on some investments
3. Prior Service Cost on Pensions
4. Gains/Losses on some derivatives