Chp 3 Terms

Question 1

Economic events that require recording in the financial statements

Answer 1

Accounting Transactions

Question 2

Stockholders’ equity is comprised of two parts:

Answer 2

Common stock, retained earnings

Question 3

T/F: revenue produced by colorations is much greater than that produced by proprietorships and partnerships.

Answer 3

True

Question 4

An external user of accounting info is which of the following?
A. Marketing manager of company?
B. President of labor union
C. Officer of corporation
D. Production supervisor of the business

Answer 4

B.

Question 5

Purchasing a delivery truck is what type of activity?

Answer 5

Investing

Question 6

A business earning revenues is considered to be a:

Answer 6

Operating activity

Question 7

Borrowing money from a bank is considered to be what type of activity?

Answer 7

Financing

Question 8

Which of the following are found in an income statement?

• revenues
• cash
• dividends
• expenses

Answer 8

Revenues and expenses

Question 9

Which of the following accounts will be found on a balance sheet?

• cash
• accounts receivable
• accounts payable
• inventory
• cogs
• common stock
• notes payable

Answer 9

Accounts payable, cash, inventory

Question 10

If revenues are 20,000 and expenses are 5,000 then the business earn/lost:

Answer 10

Earned $15,000

Question 11

If revenues are 18,000 and expenses are 22,000 then the business earned or lost

Answer 11

Incurred a net loss of 4,000

Question 12

If the beginning retained earnings is 10,000, net loss is 3,000 and dividends are 1,000, then the ending retained earnings shown on the statement of retained earnings is :

Answer 12

$6,000

Question 13

System of collecting and processing transaction data, and communicating them to decision makers is:

Answer 13

Accounting information system

Question 14

Which is an appropriate date for a balance sheet?

• dec 31, 2015
• for the month ending in dec 31, 2015
• for the quarter ending in December 31, 2015

Answer 14

Dec 31, 2015

Question 15

The statement which shows the operating, investing, and financing activities of a business is the:

Answer 15

Statement of cash flows

Question 16

Provides additional details about the items presented in the main body of the financial statements ____________

Answer 16

Notes to the financial statements

Question 17

A_________ is a separate legal entity owned by stockholders

Answer 17

Corporation

Question 18

The _____________ statement includes an addition of net income and a deduction of dividends

Answer 18

Restrained earnings

Question 19

The ability of a company to pay interests as it comes due and to repay the face value of debt at maturity:

Answer 19

Solvency

Question 20

The constraint of determining whether an item

Is important enough to influence the decision of a reasonably prudent investor or creditor:

Answer 20

Materiality.