Homework Questions_Wk1

Question 1

What is the Accounting Equation?

Answer 1

Assets = Liabilities + Equity

Question 2

A Company has assets equal to $84,351 million and liabilities equal to $33,148 million for a recent year. What was Intel’s total equity at year-end?

Answer 2

$51,203 Million

Question 3

Which balance sheet account provides the link between the balance sheet and the income statement?

Answer 3

Retained Earnings

Question 4

The Financial Statement Line Item Account: CASH ASSETS is listed on which Financial Statement(s)?

Answer 4

1) Balance Sheet

2) Statement of Cash Flows

Question 5

The Financial Statement Line Item Account: EXPENSES is listed on which Financial Statement(s)?

Answer 5

1) Income Statement

2) Statement of Cash Flows

Question 6

The Financial Statement Line Item Account: NONCASH ASSETS is listed on which Financial Statement(s)?

Answer 6

1) Balance Sheet

Question 7

The Financial Statement Line Item Account: CONTRIBUTED CAPITAL is listed on which Financial Statement(s)?

Answer 7

1) Balance Sheet

2) Stockholder’s Equity

Question 8

The Financial Statement Line Item Account: CASH OUTFLOW FOR CAPITAL EXPENDITURES is listed on which Financial Statement(s)?

Answer 8

1) Statement of Cash Flows

Question 9

The Financial Statement Line Item Account: RETAINED EARNINGS is listed on which Financial Statement(s)?

Answer 9

1) Balance Sheet

2) Stockholder’s Equity

Question 10

The Financial Statement Line Item Account: CASH INFLOW FOR STOCK ISSUED is listed on which Financial Statement(s)?

Answer 10

1) Stockholder’s Equity

2) Statement of Cash Flows

Question 11

The Financial Statement Line Item Account: CASH OUTFLOW FOR DIVIDENDS is listed on which Financial Statement(s)?

Answer 11

1) Stockholder’s Equity

2) Statement of Cash Flows

Question 12

The Financial Statement Line Item Account: NET INCOME is listed on which Financial Statement(s)?

Answer 12

1) Stockholder’s Equity

2) Statement of Cash Flows

Question 13

What is the audited annual report that includes the four financial statements, with explanatory notes and the management’s discussion and analysis (MD&A) of financial results?

Answer 13

SEC: Form 10-K

Question 14

What is the unaudited quarterly report that includes summary versions of the four financial statements and limited additional disclosures?

Answer 14

SEC: Form 10-Q

Question 15

What are some of the benefits of Audits and Corporate Governance?

Answer 15

1) Lower costs of funds and labor

2) Economic benefits from reliable disclosures

Question 16

What are some of the costs of Audits, Corporate Governance, and Disclosure of Financial Statements/Information?

Answer 16

1) Preparation and dissemination, competitive disadvantages, litigation potential, and political costs

Question 17

What is the International Accounting Standards Board (IASB)?

Answer 17

1) Oversees the development of accounting standards for many companies outside the US
2) As of early 2014, there is no formal plan for U.S. companies to transition to IFRS

Question 18

Are financial statements prepared under IFRS substantially different from those prepared under U.S. GAAP?

Answer 18

At a broad level, the answer is no.

1) Both are prepared using accrual accounting and utilize similar conceptual frameworks
2) Both require the same set of financial statements + footnotes
3) The differences are typically technical in nature

Question 19

Auditing involves a sampling of transactions and are NOT ____________ of each transaction?

Answer 19

Investigations

Question 20

What is the Auditors primary responsibility?

Answer 20

To express an OPINION based on a firm’s Financial Statements

Question 21

An audit provides __________ __________ that the statements are free __________ misstatements- An audit is not a guarantee.

Answer 21

• Reasonable Assurance

- Material

Question 22

Without Exception, all companies _____ activities, _____ those activities, and then ____ and engage in _____ those activities activities.

Answer 22

• Plan
• Finance
• Invest
• Operating

Question 23

The Sarbanes-Oxley Act was created to address what two major accounting problems?

Answer 23

1) Weak Audit Committees

2) Deficient Internal Controls

Question 24

What are the two ways in which a company can conduct Financing?

Answer 24

1) Owner Financing (Getting $ from stockholders)

2) NONowner Financing (Getting $ from banks and/or other creditors

Question 25

What is the only Financial Statement that reports information at a specific point in time?

Answer 25

Balance Sheet