Exam 1 Review

Question 1

Income Statement Heading

Answer 1

• Name of Entity
• Title of the Report
• Unit of Measure used in Statement
  No date

Question 2

Statement of Stockholders’ Equity Heading

Answer 2

• Name of Entity
• Title of the Report
• Unit of Measure used in Statement
  No date

Question 3

Balance Statement Heading

Answer 3

• Name of Entity
• Title of the Report
• Unit of Measure used in Statement
• Specific date

Question 4

What is the Income Statement?

Answer 4

Statement of earnings, income, and operations.

Question 5

Income Statement Formula

Answer 5

Formula: Revenues - Expenses = Net Income (or Net Loss)

Question 6

Statement of Stockholders’ Equity

Answer 6

Formula: Beginning Retained Earnings + Net Income - Dividends = Ending Retained Earnings

Question 7

What is the Statement of Stockholders’ Equity?

Answer 7

It explains changes in stockholders’ equity accounts including he change in retained earnings balance caused by net income and dividends during the reporting period

Question 8

Statement of Cashflows Heading

Answer 8

• Name of Entity
• Title of the Report
• Unit of Measure used in Statement
• Specific date

Question 9

What are footnotes? (on a financial statement)

Answer 9

Notes at the bottom of a financial statement that provide supplemental information about the financial condition of the company that is important to understanding the statement.

Question 10

GAAP

Answer 10

Generally Accepted Accounting Principles

• provides uniformity among financially practicing companies
• created the SEC

Question 11

SEC

Answer 11

Securities and Exchange Commission

- determines the rules for publicly traded companies

Question 12

FASB

Answer 12

Financial Accounting Standards Board

- holds the current responsibilities of generally accepted accounting principles