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Exam 1: Introducing Financial Statements

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Question 21

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The assets of a company total $700,000; the liabilities,$200,000.What are the net assets?

A) $900,000.
B) $700,000.
C) $500,000.
D) $200,000.
E) It is impossible to determine unless the amount of stockholder investments is known.

F) A) and D)
G) A) and C)

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Question 22

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The term ________ refers to a liability that promises a future outflow of resources.

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Question 23

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The first section of the income statement reports cash flows from operating activities.

________ is the area of accounting aimed at serving external users by providing them with general-purpose financial statements.

Owner claims on assets,also known as net assets,is called ________.

Cash investments by stockholders are listed on which of the following statement(s) ?

The statement of cash flows shows the net effect of revenues and expenses for a reporting period.

Dividends paid to stockholders are subtracted as expenses in the calculation of net income.

________ are beliefs that separate right from wrong and are considered accepted standards of good and bad behavior.

Assets are the resources a company owns or controls that are expected to yield future benefits.

The Sarbanes-Oxley Act (SOX)requires each issuer of securities to disclose whether it has adopted a code of ethics for its senior financial officers and the contents of that code.

Ethics are beliefs that separate right from wrong.

The measurement principle,also called the cost principle:

A common characteristic of ________ is their ability to yield expected future benefits to a business.

A financial statement providing information that helps users understand a company's financial status,and which lists the types and amounts of assets,liabilities,and equity as of a specific date,is called a(n) :

External users of accounting information include all of the following except:

According to the measurement (cost)principle,it is necessary for managers to report an approximation of an asset's market value upon purchase.

If the assets of a company increase by $55,000 during the year and its liabilities increase by $25,000 during the same year,then the change in equity of the company during the year must have been:

There are three major types of business activities.________activities are the means organizations use to pay for resources such as land,building,and equipment to carry out plans.

Operating activities include long-term borrowing and repaying cash from lenders,and cash investments by or dividends paid to stockholders.