CH 1: connect

Question 1

A system that collects and processes financial information about an organization and reports that information to decision makers.

Answer 1

Accounting

Question 2

Information that helps evaluate the company’s past behavior and predict its future.

Answer 2

relevant information

Question 3

An unincorporated business owned by two or more persons.

Answer 3

partnership

Question 4

The organization for which financial data are to be collected (separate and distinct from its owners).

Answer 4

Accounting entity

Question 5

An incorporated entity that issues shares of stock as evidence of ownership

Answer 5

Corporation

Question 6

An examination of the financial reports to ensure that they represent what they claim and conform with generally accepted accounting principles.

Answer 6

audit

Question 7

An unincorporated business owned by one person.

Answer 7

sole proprietorship

Question 8

Certified Public Accountant.

Answer 8

CPA

Question 9

A report that describes the auditor’s opinion of the fairness of the financial statement presentations and the evidence gathered to support that opinion.

Answer 9

audit report

Question 10

Securities and Exchange Commission.

Answer 10

SEC

Question 11

Financial Accounting Standards Board.

Answer 11

FASB

Question 12

Generally accepted accounting principles.

Answer 12

GAAP

Question 13

A company with stock that can be bought and sold by investors on established stock exchanges.

Answer 13

publicly traded

Question 14

accounts receivable

Answer 14

asset

Question 15

cash/cash equivalents

Answer 15

assets

Question 16

net sales

Answer 16

revenue

Question 17

Debt due within one year

Answer 17

liability

Question 18

taxes payable

Answer 18

Liability

Question 19

retained earnings

Answer 19

Stockholders’ equity

Question 20

Cost of products sold

Answer 20

expense

Question 21

Selling, general, and administrative expense

Answer 21

expense

Question 22

Income taxes

Answer 22

expense

Question 23

accts payable

Answer 23

Liability

Question 24

Trademarks and other intangible assets

Answer 24

Asset

Question 25

Property, plant, and equipment

Answer 25

Asset

Question 26

land

Answer 26

asset

Question 27

Long-term debt

Answer 27

liability

Question 28

Inventories

Answer 28

asset

Question 29

Interest expense

Answer 29

Expense

Question 30

A balance sheet shows

Answer 30

assets, liabilities, and stockholders' equity at a single point in time

Question 31

The two sources of stockholders' equity are amounts Blank

Answer 31

-paid in from shareholders -earned and retained by the corporation

Question 32

does revenue include payments not actually made yet

Answer 32

YES on inc statement

Question 33

The statement of stockholders' equity reports the

Answer 33

changes in earnings and dividends for a specified period of time

Question 34

what is on inc sheet and retained earnings

Question 35

Which of the following is a disadvantage of a corporation when compared to a partnership?

Answer 35

The corporation and its stockholders are subject to double taxation.

Question 36

Which of the following statements is true about a sole proprietorship?

Answer 36

The owner and the business are separate accounting entities but not separate legal entities.

Question 37

Which of the following groups has primary responsibility for the information contained in the financial statements?

Answer 37

The company's management

Question 38

Which of the following is not reported as a liability on a balance sheet?

Answer 38

Common stock

Question 39

In what order would the items on the balance sheet appear?

Answer 39

Assets, liabilities, common stock, and retained earnings

Question 40

Sources of financing for the company’s economic resources include:

Answer 40

Liabilities and stockholders’ equity.

Question 41

Which of the following describes the amount of insurance expense reported on the income statement?

Answer 41

The amount of insurance used (incurred) in the current period to help generate revenue.

Question 42

Which financial statement would you use to determine a company's earnings performance during an accounting period?

Answer 42

Income statement

Question 43

Which of the following equations is the balance sheet equation?

Answer 43

Assets = Liabilities + Stockholders' Equity

Question 44

Which of the following statements describes the balance sheet?

Answer 44

Assets are generally reported on the balance sheet at the cost incurred to acquire them.

Question 45

bank loans

Answer 45

liability

Question 46

Dividends payable

Answer 46

Liability

Question 46

Retained earnings

Answer 46

shareholders equity

Question 47

Provision for income taxes*

Answer 47

expense

Question 48

Machinery and equipment

Answer 48

assest

Question 49

Rental and royalty costs

Answer 49

expenses

Question 50

Investments (in other companies)

Answer 50

Asset

Question 51

Why does a company hire independent auditors?

Answer 51

To report on the fairness of financial statement presentation.

Question 52

Which of the following would most likely increase retained earnings?

Answer 52

An increase in revenues.