Chapter 1

Question 1

accounting

Answer 1

is a system that collects and processes(analyzes,measures,and records) financial information about an organization and reports the information to decision makers

Question 2

Annual Report

Answer 2

a report prepared by corporate management that presents financial information including financial statements, a management discussion and analysis section, notes , and an independent auditor’s report

Question 3

Assets

Answer 3

resources owned by a business

Question 4

Auditor’s Report

Answer 4

a report by an independent outside auditor stating the auditor’s opinion as to the fairness of the presentation of the financial position and results of operations and their conformance with generally accepted principles

Question 5

Balance Sheet

Answer 5

a financial statement that reports the assets and claims to those assets at a specific point in time

Question 6

Asset=?

Answer 6

Liabilities + Stockholders’ Equity

Question 7

Certified Public Accountant(CPA)

Answer 7

an individual who has met certain criteria and is thus allowed to perform audits of corporations

Question 8

Common Stock

Answer 8

is the investment of cash and other assets in the business directly by the owners . The owners will receive a certificate as evidence of their ownership interest on the assets.

Question 9

Corporation

Answer 9

a business organized as a separate legal entity owned by stockholders

Question 10

Dividends

Answer 10

payments of cash from a corporation to its stockholders

Question 11

Expenses

Answer 11

The costs of assets consumed or services used in the process of generating revenue

Question 12

Income Statement

Answer 12

a financial statement that reports a company’s revenues and expenses and resulting net income or net loss for a specific period of time

Question 13

Liabilities

Answer 13

Amounts owed to creditors in the form of debts and and other obligations

Question 14

Net Income

Answer 14

The amount by which revenues exceed expenses

Question 15

Net Loss

Answer 15

the amount by which expenses exceed revenues

Question 16

Notes to the financial statements

Answer 16

Notes clarify information presented in the financial statements and provide additional detail

Question 17

Partnership

Answer 17

A business owned by two or more persons associated as partners

Question 18

Retained Earnings

Answer 18

The amount of net income retained in the corporation

Question 19

Retained earnings statement

Answer 19

A financial statement that summarizes the amounts and causes of changes in retained earnings for a specific time period

Question 20

Revenue

Answer 20

the increase in assets or decrease in liabilities resulting from the sale of goods or the performance of services in the normal course of business

Question 21

Sarbanes-Oxley Act (SOX)

Answer 21

Regulations passed by Congress to reduce unethical corporate behavior

Question 22

Sole Proprietorship

Answer 22

A business owned by one person

Question 23

Statement of Cash Flows

Answer 23

A financial statement that provides financial information about the cash receipts and cash payments of a business for a specific period of time

Question 24

Stockholders’ equity

Answer 24

The owners’ claim to assets

Question 25

Net Income=?

Answer 25

Revenue-Expenses

Question 26

Dividends

Answer 26

distribution of equity to the owners, Typically money received from the business to the owners. It is the owners share of the business profits .

Question 27

interest income

Answer 27

extra amount of money that is paid by the borrower to the lender for use of the lender's moeny