SO1Chapter 1 Introduction to Financial Statements Describe the primary forms of business organizatio

1
SO1Chapter 1 Introduction to Financial
Statements Describe the primary forms of
business organization.

• The liability of corporate stockholders is
  limited to the _____.

Answer Amount of their investment
2
SO1Chapter 1 Introduction to Financial
Statements Describe the primary forms of
business organization.

• A business organized as a separate legal entity
  owned by stockholders is a _____.

Answer Corporation
3
SO1Chapter 1 Introduction to Financial
Statements Describe the primary forms of
business organization.

• Which form of business in the U.S. generates more
  revenue than the others?

Answer Corporation
4
SO1Chapter 1 Introduction to Financial
Statements Describe the primary forms of
business organization.

• The ____ form of business organization generally
  receives favorable tax treatment relative to a
  corporation.

Answer Proprietorship
5
SO1Chapter 1 Introduction to Financial
Statements Describe the primary forms of
business organization.

• Who are the owners of a corporation?

Answer Stockholders
6
SO1Chapter 1 Introduction to Financial
Statements Describe the primary forms of
business organization.

• Which form of business organization is a common
  form of organization for service-type businesses?

Answer Partnership
7
SO1Chapter 1 Introduction to Financial
Statements Describe the primary forms of
business organization.

• What are some advantages of the corporate form of
  business organization?

Answer No personal liability, easy to transfer
ownership, and easy to raise funds.
8
SO1Chapter 1 Introduction to Financial
StatementsDescribe the primary forms of business
organization.

• The information system that identifies, records
  and communicates the economic events of an
  organization to interested users is called

Answer Accounting
9
SO1Chapter 1 Introduction to Financial
Statements Describe the primary forms of
business organization.

• List the three forms of business organization.

Answer Sole proprietorship, partnership and
corporation
10
SO2Chapter 1 Introduction to Financial
Statements Identify the users and uses of
accounting.

• List a major internal user of information.

Answer Management of a business enterprise
11
SO2Chapter 1 Introduction to Financial
Statements Identify the users and uses of
accounting.

• The information needs and questions of ___ users
  vary considerably.

Answer External
12
SO2Chapter 1 Introduction to Financial
Statements Identify the users and uses of
accounting.

• Name two primary external users of accounting
  information.

Answer Investors and creditors
13
SO2Chapter 1 Introduction to Financial
Statements Identify the users and uses of
accounting.

• Give two examples of internal users of accounting
  data.

Answer President of company, Production
Manager, Merchandising Inventory Clerk, etc.
14
SO2Chapter 1 Introduction to Financial
Statements Identify the users and uses of
accounting.

• Which group would use accounting information to
  insure the entity is operating within prescribed
  rules?

Answer Regulatory agencies
15
SO2Chapter 1 Introduction to Financial
Statements Identify the users and uses of
accounting.

• Which group would use accounting information to
  determine whether the company can pay its
  obligations?

Answer Creditors
16
SO2Chapter 1 Introduction to Financial
Statements Identify the users and uses of
accounting.

• Which group would use accounting information to
  determine whether the companys net income will
  result in a stock price increase?

Answer Investors in common stock
17
SO2Chapter 1 Introduction to Financial
Statements Identify the users and uses of
accounting.

• For each situation, indicate whether the
  following are external or internal users IRS
  Agent, Management, Creditors, Customers

Answer External IRS Agent, Creditors,
Customers Internal Management
18
SO2Chapter 1 Introduction to Financial
Statements Identify the users and uses of
accounting.

• Give an example of a user of accounting
  information with an indirect financial interest.

Answer Financial adviser, etc.
19
SO3Chapter 1 Introduction to Financial
Statements Explain the three principal types of
business activities.

• ____ activities for corporations includes
  borrowing money and selling shares of their own
  stock.

Answer Financing
20
SO3Chapter 1 Introduction to Financial
Statements Explain the three principal types of
business activities.

• ___ activities involve collecting the necessary
  funds to support the business.

Answer Financing
21
SO3Chapter 1 Introduction to Financial
Statements Explain the three principal types of
business activities.

• ____ activities involve putting the resources of
  the business into action to generate a profit.

Answer Operating
22
SO3Chapter 1 Introduction to Financial
Statements Explain the three principal types of
business activities.

• What three types of business activities are most
  businesses involved in?

Answer Financing, Investing, and Operating (FIO)
23
SO3Chapter 1 Introduction to Financial
Statements Explain the three principal types of
business activities.

• Buying assets needed to operate a business is an
  example of a(n) ___ activity.

Answer Investing
24
SO3Chapter 1 Introduction to Financial
Statements Explain the three principal types of
business activities.

• ____ are resources owned by a business and
  provide future services or benefits to the
  business.

Answer Assets
25
SO3Chapter 1 Introduction to Financial
Statements Explain the three principal types of
business activities.

• Which activities involve putting the resources of
  the business into action to generate a profit?

Answer Operating
26
SO3Chapter 1 Introduction to Financial
Statements Explain the three principal types of
business activities.

• A common characteristic possessed by all assets
  is ____.

Answer Future economic benefit.
27
SO3Chapter 1 Introduction to Financial
Statements Explain the three principal types of
business activities.

• The cost of assets consumed or services used is
  also known as ____. They are incurred to
  generate revenues.

Answer Expenses
28
SO4Chapter 1 Introduction to Financial
Statements Describe the content and purpose of
each of the financial statements.

• ____ for the period is determined by subtracting
  total expenses from total revenues.

Answer Net Income
29
SO4Chapter 1 Introduction to Financial
Statements Describe the content and purpose of
each of the financial statements.

• ____ is another term for profit.

Answer Net Income
30
SO4Chapter 1 Introduction to Financial
Statements Describe the content and purpose of
each of the financial statements.

• The primary purpose for the ___ is to provide
  information about the cash receipts and cash
  payments of a company for a specific period of
  time.

Answer Statement of Cash Flows
31
SO4Chapter 1 Introduction to Financial
Statements Describe the content and purpose of
each of the financial statements.

• Dividends are reports on the _____.

Answer Retained earnings statement
32
SO4Chapter 1 Introduction to Financial
StatementsDescribe the content and purpose of
each of the financial statements.

• Dividends paid decrease ______.

Answer Retained Earnings
33
SO4Chapter 1 Introduction to Financial
StatementsDescribe the content and purpose of
each of the financial statements.

• Which financial statement is concerned with the
  company at a point in time?

Answer Balance Sheet
34
SO4Chapter 1 Introduction to Financial
StatementsDescribe the content and purpose of
each of the financial statements.

• The companys policy towards dividends and growth
  could best be determined by examining the _____.

Answer Retained Earnings Statement
35
SO4Chapter 1 Introduction to Financial
StatementsDescribe the content and purpose of
each of the financial statements.

• If the retained earnings account increases from
  the beginning of the year to the end of the year,
  then ____ is greater than dividends.

Answer Net Income
36
SO4Chapter 1 Introduction to Financial
StatementsDescribe the content and purpose of
each of the financial statements.

• What is the order used to prepare financial
  statements?

Answer Income Statement, Retained earnings
statement, Balance Sheet, Statement of cash flows
37
SO5Chapter 1 Introduction to Financial
StatementsExplain the meaning of assets,
liabilities, and stockholders equity, and state
the basic accounting equation.

• Give three ways the accounting equation can be
  expressed.

Answer Assets Liabilities Stockholders
Equity Assets Liabilities Stockholders
Equity Assets Stockholders Equity
Liabilities
38
SO5Chapter 1 Introduction to Financial
StatementsExplain the meaning of assets,
liabilities, and stockholders equity, and state
the basic accounting equation.

• If the assets owned by a business total 10,000
  and liabilities total 4,000, stockholders
  equity would be what?

Answer 6,000
39
SO5Chapter 1 Introduction to Financial
StatementsExplain the meaning of assets,
liabilities, and stockholders equity, and state
the basic accounting equation.

• Claims of creditors on the assets of the business
  are called ___.

Answer Liabilities
40
SO5Chapter 1 Introduction to Financial
StatementsExplain the meaning of assets,
liabilities, and stockholders equity, and state
the basic accounting equation.

• Whose rights to assets supersede the owners
  rights to the assets?

Answer Creditors
41
SO5Chapter 1 Introduction to Financial
StatementsExplain the meaning of assets,
liabilities, and stockholders equity, and state
the basic accounting equation.

• What does a balance sheet show?

Answer Assets, liabilities and stockholders
equity
42
SO5Chapter 1 Introduction to Financial
StatementsExplain the meaning of assets,
liabilities, and stockholders equity, and state
the basic accounting equation.

• If total liabilities increased by 2,500 and
  stockholders equity increased by 500 during a
  period of time, then total assets must change by
  what amount and direction during that same period?

Answer 3,000 increase
43
SO5Chapter 1 Introduction to Financial
StatementsExplain the meaning of assets,
liabilities, and stockholders equity, and state
the basic accounting equation.

• Liabilities of a company are owed to?

Answer Creditors
44
SO5Chapter 1 Introduction to Financial
StatementsExplain the meaning of assets,
liabilities, and stockholders equity, and state
the basic accounting equation.

• Common stock is reported on the ____?

Answer Balance Sheet
45
SO5Chapter 1 Introduction to Financial
StatementsExplain the meaning of assets,
liabilities, and stockholders equity, and state
the basic accounting equation.

• Stockholders equity is comprised of what two
  items?

Answer Common stock and retained earnings
46
SO6Chapter 1 Introduction to Financial
StatementsDescribe the components that
supplement the financial statements in an annual
report.

• All U.S. publicly traded companies must provide
  their shareholders with what each year?

Answer Annual Report
47
SO6Chapter 1 Introduction to Financial
StatementsDescribe the components that
supplement the financial statements in an annual
report.

• Information in the notes to the financial
  statements does not have to be ____?

Answer quantifiable (numeric)
48
SO6Chapter 1 Introduction to Financial
StatementsDescribe the components that
supplement the financial statements in an annual
report.

• A(n) ____ is accounting professional who conduct
  an independent examination of the accounting data
  presented by a company?

Answer Auditor
49
SO6Chapter 1 Introduction to Financial
StatementsDescribe the components that
supplement the financial statements in an annual
report.

• Besides financial statements, what are some other
  items in an annual report?

Answer management discussion and analysis
section, notes to the financial statements, and
an auditors report.
50
SO6Chapter 1 Introduction to Financial
StatementsDescribe the components that
supplement the financial statements in an annual
report.

• What clarifies information presented in the
  financial statements, as well as expanding upon
  it where additional detail is needed?

Answer Notes to the financial statements
51
SO6Chapter 1 Introduction to Financial
StatementsDescribe the components that
supplement the financial statements in an annual
report.

• The information needed to determine whether a
  company is using accounting methods similar to
  those of its competitors would be found in the
  ___?

Answer Notes to the financial statements
52
SO6Chapter 1 Introduction to Financial
StatementsDescribe the components that
supplement the financial statements in an annual
report.

• In the annual report where would a financial
  statement reader find out if the companys
  financial statements give a fair depiction of its
  financial position and operating results?

Answer Auditors report
53
SO6Chapter 1 Introduction to Financial
StatementsDescribe the components that
supplement the financial statements in an annual
report.

• Managements views on the companys short-term
  debt paying ability, expansion financing, and
  results of operation are found in the ____?

Answer Management discussion and analysis
section
54
SO6Chapter 1 Introduction to Financial
StatementsDescribe the components that
supplement the financial statements in an annual
report.

• ___ to the financial statements provide
  additional explanation or detail to make the
  financial statements more informative.

Answer Notes