Ch. 2 (IFSA) Summary

Question 1

___ can be classified into three groups: operating activities, investing activities, and financing activities.

Answer 1

Business activities

Question 2

Business activities can be classified into three groups: ___, investing activities, and financing activities.

Answer 2

operating activities

Question 3

Business activities can be classified into three groups: operating activities, ___, and financing activities.

Answer 3

investing activities

Question 4

Business activities can be classified into three groups: operating activities, investing activities, and ___.

Answer 4

financing activities

Question 5

Companies classify ___ into common accounts that are components of the five financial statement elements: assets, liabilities, equity, revenue, and expense.

Answer 5

transactions

Question 6

Companies classify transactions into ___ that are components of the five financial statement elements: assets, liabilities, equity, revenue, and expense.

Answer 6

common accounts

Question 7

Companies classify transactions into common accounts that are components of ___: assets, liabilities, equity, revenue, and expense.

Answer 7

the five financial statement elements

Question 8

Companies classify transactions into common accounts that are components of the five financial statement elements: ___, liabilities, equity, revenue, and expense.

Answer 8

assets

Question 9

Companies classify transactions into common accounts that are components of the five financial statement elements: assets, ___, equity, revenue, and expense.

Answer 9

liabilities

Question 10

Companies classify transactions into common accounts that are components of the five financial statement elements: assets, liabilities, ___, revenue, and expense.

Answer 10

equity

Question 11

Companies classify transactions into common accounts that are components of the five financial statement elements: assets, liabilities, equity, ___, and expense.

Answer 11

revenue

Question 12

Companies classify transactions into common accounts that are components of the five financial statement elements: assets, liabilities, equity, revenue, and ___.

Answer 12

expense

Question 13

The core of the accounting process is ___: Assets = Liabilities + Owners’ equity.

Answer 13

the basic accounting equation

Question 14

The core of the accounting process is the basic accounting equation: ___ = Liabilities + Owners’ equity.

Answer 14

Assets

Question 15

The core of the accounting process is the basic accounting equation: Assets = ___ + Owners’ equity.

Answer 15

Liabilities

Question 16

The core of the accounting process is the basic accounting equation: Assets = Liabilities + ___.

Answer 16

Owners’ equity

Question 17

___ is Assets = Liabilities + Contributed capital + Beginning retained earnings + Revenue - Expenses - Dividends.

Answer 17

The expanded accounting equation

Question 18

The expanded accounting equation is ___ = Liabilities + Contributed capital + Beginning retained earnings + Revenue - Expenses - Dividends.

Answer 18

Assets

Question 19

The expanded accounting equation is Assets = ___ + Contributed capital + Beginning retained earnings + Revenue - Expenses - Dividends.

Answer 19

Liabilities

Question 20

The expanded accounting equation is Assets = Liabilities + ___ + Beginning retained earnings + Revenue - Expenses - Dividends.

Answer 20

Contributed capital

Question 21

The expanded accounting equation is Assets = Liabilities + Contributed capital + ___ + Revenue - Expenses - Dividends.

Answer 21

Beginning retained earnings

Question 22

The expanded accounting equation is Assets = Liabilities + Contributed capital + Beginning retained earnings + ___ - Expenses - Dividends.

Answer 22

Revenue

Question 23

The expanded accounting equation is Assets = Liabilities + Contributed capital + Beginning retained earnings + Revenue - ___ - Dividends.

Answer 23

Expenses

Question 24

The expanded accounting equation is Assets = Liabilities + Contributed capital + Beginning retained earnings + Revenue - Expenses - ___.

Answer 24

Dividends

Question 25

___ are recorded in an accounting system that is based on the basic and expanded accounting equations.

Answer 25

Business transactions

Question 26

Business transactions are recorded in an accounting system that is based on ___.

Answer 26

the basic and expanded accounting equations

Question 27

The accounting system tracks and summarizes data used to create financial statements: ___, income statement, statement of cash flows, and statement of owners’ equity. The statement of retained earnings is a component of the statement of owners’ equity.

Answer 27

the balance sheet

Question 28

The accounting system tracks and summarizes data used to create financial statements: the balance sheet, ___, statement of cash flows, and statement of owners’ equity. The statement of retained earnings is a component of the statement of owners’ equity.

Answer 28

income statement

Question 29

The accounting system tracks and summarizes data used to create financial statements: the balance sheet, income statement, ___, and statement of owners’ equity. The statement of retained earnings is a component of the statement of owners’ equity.

Answer 29

statement of cash flows

Question 30

The accounting system tracks and summarizes data used to create financial statements: the balance sheet, income statement, statement of cash flows, and ___. The statement of retained earnings is a component of the statement of owners’ equity.

Answer 30

statement of owners’ equity

Question 31

The accounting system tracks and summarizes data used to create financial statements: the balance sheet, income statement, statement of cash flows, and statement of owners’ equity. ___ is a component of the statement of owners’ equity.

Answer 31

The statement of retained earnings

Question 32

The accounting system tracks and summarizes data used to create financial statements: the balance sheet, income statement, statement of cash flows, and statement of owners’ equity. The statement of retained earnings is a component of ____.

Answer 32

the statement of owners’ equity

Question 33

___ are a necessary part of the accounting process and are designed to allocate activity to the proper period for financial reporting purposes.

Answer 33

Accruals

Question 34

Accruals are a necessary part of the accounting process and are designed to ___.

Answer 34

allocate activity to the proper period for financial reporting purposes

Question 35

The results of the accounting process are ___ that are used by managers, investors, creditors, analysts, and others in making business decisions

Answer 35

financial reports

Question 36

The results of the accounting process are financial reports that are used by ___, investors, creditors, analysts, and others in making business decisions

Answer 36

managers

Question 37

The results of the accounting process are financial reports that are used by managers, ___, creditors, analysts, and others in making business decisions

Answer 37

investors

Question 38

The results of the accounting process are financial reports that are used by managers, investors, ___, analysts, and others in making business decisions

Answer 38

creditors

Question 39

The results of the accounting process are financial reports that are used by managers, investors, creditors, ___, and others in making business decisions

Answer 39

analysts

Question 40

An analyst uses ___ to make judgments on the financial health of a company.

Answer 40

the financial statements

Question 41

An analyst uses the financial statements to make judgments on ___ of a company.

Answer 41

the financial health

Question 42

Company management can ___ financial statements, and a perceptive analyst can use his or her understanding of financial statements to detect misrepresentations.

Answer 42

manipulate

Question 43

Company management can manipulate financial statements, and a perceptive analyst can use his or her understanding of financial statements to ___.

Answer 43

detect misrepresentations