Final Exam

Question 1

Decision making for people external to the business

Answer 1

Accounting

Question 2

Accounting equation

Answer 2

Assets= Liabilities +Stockholders Equity

Question 3

What are the financial statements?

Answer 3

Income statement
Statement of stockholders equity
Balance sheet
Statement of cash flows

Question 4

A financial statement that presents the financial position of the company on a particular date

Answer 4

Balance Sheet

Question 5

A financial statement that measures activities involving cash receipts and cash payments over an interval of time

Answer 5

Statement of Cash Flows

Question 6

A financial statement that reports the company’s revenues and expenses over an interval of time.

Answer 6

Income Statement

Question 7

A financial statement that summarizes the changes in stockholders’ equity over an interval of time.

Answer 7

Statement of stockholders’ equity

Question 8

Income statement equation

Answer 8

Revenue - Expenses = net income

Question 9

Equation for statement of stockholders’ equity

Answer 9

Common Stock + Retained Earnings = Stockholders’ Equity

Question 10

Balance Sheet Equation

Answer 10

Liabilities + Stockholders’ Equity =Assets

Question 11

Statement of cash flow equation

Answer 11

Operating cash flow + Investing cash flows + Financing cash flows = Change in cash

Question 12

An independent, private body that has primary responsibility for the establishment of GAAP in the United States.

Answer 12

FASB

financial accounting standards board

Question 13

The federal agency with ultimate authority to determine the rules for preparing statements for companies whose stock is sold to the public.

Answer 13

SEC

Securities and Exchanges Commission

Question 14

The profession organization of certified public accountants

Answer 14

AICPA

American institute of certified public accountants

Question 15

A unit or scale of measurement can be used to measure financial statement elements

Answer 15

Monetary unit assumption

Question 16

All economic events with a particular economic entity can be identified

Answer 16

Economic entity

Question 17

2002 act provides for the regulation of auditors.

Answer 17

SOX

Sarbanes-Oxley Act

Question 18

Retained earnings equation

Answer 18

Beg balance + net income - dividends

Question 19

Cumulative amount of net income earned over the life of the company that has been kept in the business rather than distributed to stockholders as dividends

Answer 19

Retained earnings

Question 20

Multi-step income statement

Answer 20

Revenue- COGS - operating expenses- income tax expense

Question 21

Liquidity analysis is required

A) to asses the nearness to cash of a company’s assets and liabilities
B) to be reported in the financial statements for all companies publicly traded.
C) when a company reports no recurring items in its financial statements.

Answer 21

A) to asses the nearness to cash of a company’s assets and liabilities

Question 22

Reflects the impact of financial accounting information on investors and creditors decisions.

Answer 22

Materiality