EXAM 1

Question 1

PRIMARY MEANS OF COMMUNICATING BUSINESS ACTIVITIES

Answer 1

FINANCIAL STATEMENT

Question 2

REPORTS PROVIDING INFO TO EXTERNAL USERS

Answer 2

FINANCIAL STATEMENTS

Question 3

4 PRIMARY FINANCIAL STATEMENTS

Answer 3

1. INCOME STATEMENT
2. STATEMENT OF STOCKHOLDER’S EQUITY
3. BALANCE SHEET
4. STATEMENT OF CASH FLOWS

Question 4

REPORTS REVENUES, EXPENSES, & NET INCOME/LOSS

Answer 4

INCOME STATEMENT

Question 5

INCOME STATEMENTS REPORT WHAT?

Answer 5

REVENUES, EXPENSES, NET INCOME/LOSS

Question 6

SUMMARIZES CHANGES IN STOCKHOLDER’S EQUITY

Answer 6

STATEMENT OF STOCKHOLDER’S EQUITY

Question 7

STATEMENT OF STOCKHOLDER’S EQUITY SUMMARIZES WHAT?

Answer 7

CHANGES IN STOCKHOLDER’S EQUITY

Question 8

2 PRIMARY COMPONENTS OF STOCKHOLDER’S EQUITY

Answer 8

1. COMMON STOCK

2. RETAINED EARNINGS

Question 9

COMMON STOCK REPRESENTS WHAT?

Answer 9

AMOUNTS INVESTED BY STOCKHOLDERS

Question 10

AMOUNTS INVESTED BY STOCKHOLDERS ARE CALLED WHAT?

Answer 10

COMMON STOCKS

Question 11

COMMON STOCK IS AN EXTERNAL OR INTERNAL SOURCE OF STOCKHOLDER’S EQUITY?

Answer 11

EXTERNAL

Question 12

RETAINED EARNINGS ARE AN EXTERNAL OR INTERNAL SOURCE OF STOCKHOLDER’S EQUITY?

Answer 12

INTERNAL

Question 13

RETAINED EARNINGS = ?

Answer 13

ALL NET INCOME - ALL DIVIDENDS

Question 14

RETAINED EARNINGS = ? - ALL DIVIDENDS

Answer 14

ALL NET INCOME

Question 15

RETAINED EARNINGS = ALL NET INCOME ? ALL DIVIDENDS

Answer 15

-

Question 16

RETAINED EARNINGS = ALL NET INCOME - ?

Answer 16

ALL DIVIDENDS

Question 17

PRESENTS COMPANY’S FINANCIAL POSITION

Answer 17

BALANCE SHEET

Question 18

BALANCE SHEET PRESENT WHAT?

Answer 18

COMPANY’S FINANCIAL POSITION

Question 19

ACCOUNTING EQUATION:

ASSETS = ?

Answer 19

LIABILITIES + STOCKHOLDER’S EQUITY

Question 20

ACCOUNTING EQUATION:

ASSETS = ? + STOCKHOLDER’S EQUITY

Answer 20

LIABILITIES

Question 21

ACCOUNTING EQUATION:

ASSETS = LIABILITIES ? STOCKHOLDER’S EQUITY

Answer 21

+

Question 22

ACCOUNTING EQUATION:

ASSETS = LIABILITIES + ?

Answer 22

STOCKHOLDER’S EQUITY

Question 23

STOCKHOLDER’S EQUITY = ?

Answer 23

TOTAL ASSETS - TOTAL LIABILITIES

Question 24

STOCKHOLDER’S EQUITY = ? - TOTAL LIABILITIES

Answer 24

TOTAL ASSETS

Question 25

STOCKHOLDER'S EQUITY = TOTAL ASSETS ? TOTAL LIABILITIES

Answer 25

-

Question 26

STOCKHOLDER'S EQUITY = TOTAL ASSETS - ?

Answer 26

TOTAL LIABILITIES

Question 27

MEASURES ACTIVITIES INVOLVING CASH RECEIPTS & PAYMENTS

Answer 27

STATEMENT OF CASH FLOWS

Question 28

STATEMENT OF CASH FLOWS MEASURES WHAT?

Answer 28

ACTIVITIES INVOLVING CASH RECEIPTS & PAYMENTS

Question 29

3 CATEGORIES OF CASH TRANSACTIONS

Answer 29

1. OPERATING 2. INVESTING 3. FINANCING

Question 30

2 OTHER COMPONENTS OF ANNUAL REPORTS

Answer 30

1. MANAGEMENT'S DISCUSSION & ANALYSIS | 2. NOTE DISCLOSURES

Question 31

Ability to earn a profit from its operations during the current period IS DETERMINED WHERE?

Answer 31

income statement

Question 32

Shareholders' equity arises primarily from amounts invested by shareholders and amounts ______.

Answer 32

earned by the corporation

Question 33

Retained earnings represents ___?

Answer 33

the total net income earned over the life of the company that has not been distributed as dividends

Question 34

the total net income earned over the life of the company that has not been distributed as dividends ARE?

Answer 34

RETAINED EARNINGS

Question 35

Profits earned by a company that have not been paid to stockholders are called ___ earnings

Answer 35

RETAINED EARNINGS

Question 36

The purpose of an income statement is to:

Answer 36

summarize the profit-generating activities that occurred during a particular reporting period

Question 37

Which ITEMS would be found on a company's balance sheet?

Answer 37

1. ACCOUNTS RECEIVABLE 2. EQUIPMENT 3. NOTES PAYABLE 4. COMMON STOCK

Question 38

A balance sheet lists theSE 3 ITEMS as of a specific date.

Answer 38

1. Assets 2. LIABILITIES 3. Stockholders' equity

Question 39

The purpose of a statement of cash flows is to provide information about WHAT 2 ACTIVITIES?

Answer 39

1. CASH RECEIPTS | 2. CASH DISBURSEMENTS

Question 40

CASH RECEIPTS & DISBURSEMENTS ARE LISTED WHERE?

Answer 40

STATEMENT OF CASH FLOWS

Question 41

The financial statement that is most useful in explaining a company's stock price performance is the ___?

Answer 41

INCOME STATEMENT

Question 42

Information that best explains companies' stock price performance is reported on the ___?

Answer 42

INCOME STATEMENT

Question 43

___ is the common abbreviation for the Board that currently establishes financial accounting and reporting standards in the U.S. (Enter the acronym.)

Answer 43

FASB (Financial Accounting Standards Board)

Question 44

To be useful for decision making, information should possess theSE 2 fundamental qualities of representation.

Answer 44

1. relevance | 2. FAITHFUL REPRESENTATION

Question 45

Predictive value and confirmatory value are components of which fundamental qualitative characteristic?

Answer 45

RELEVANCE

Question 46

Financial information that may impact investors' and creditors' decisions is referred to as ___ and must be reported under GAAP

Answer 46

MATERIALITY

Question 47

Positive income is consistent with effectiveness of management

Answer 47

Confirmatory value

Question 48

Consistently increasing income helps forecast the company's ability to generate future cash

Answer 48

Predictive value

Question 49

CRADLER MNEMONIC

Answer 49

CONSERVATIVE REPUBLICANS AND DEMOCRAT LIBERALS EXPENSE RETARDEDLY

Question 50

CradleR STANDS FOR?

Answer 50

1. CONTRIBUTED CAPITAL | 2. RETAINED EARNINGS