Acct 201

Front 1

What is the purpose of accounting?

Back 1

to identify, record, and communicate the economic events of an organization

Front 2

What are the two broad groups of users of financial information?

Back 2

internal and external users

Front 3

List some examples of internal users

Back 3

management, human resources, finance, and marketing

Front 4

List some examples of external users

Back 4

Customers, SEC, creditors, Labor Unions, investors, IRS

Front 5

What user would answer the following question: Can we afford to give our employees a pay raise?

Back 5

Human Resources

Front 6

What user would answer the following question: Did the company earn a satisfactory income?

Back 6

Investors

Front 7

What user would answer the following question: Should any product lines be eliminated?

Back 7

Management

Front 8

What user would answer the following question: Is cash sufficient to pay dividends to stockholders?

Back 8

Finance

Front 9

What user would answer the following question: What price for our product will maximize net income?

Back 9

Marketing

Front 10

What user would answer the following qustion: Will the company be able to pay its debts as they become due?

Back 10

Creditors

Front 11

What are Standards of conduct by which one’s actions are judged as right or wrong, honest or dishonest, fair or not fair?

Back 11

Ethics

Front 12

List some examples of recent financial scandals

Back 12

Enron, WorldCom, HealthSouth, AIG

Front 13

What are standards that are generally accepted and universally practiced? These standards indicate how to report economic events.

Back 13

Generally Accepted Accounting Principles (GAAP)

Front 14

What principle dictates that companies record and report assets at their cost?

Back 14

Cost Principle

Front 15

Rylie’s Kitchen purchased a building on January 1, 2012 for $200,000, but it recently was appraised at a market value of $250,000. On the 12/31/12 financial statements, at what amount should the building be reported according to the Cost Principle?

Back 15

$200,000

Front 16

What assumption states to include in the accounting records only transaction data that can be expressed in terms of money?

Back 16

Monetary Unit Assumption

Front 17

What assumption requires that activities of the entity be kept separate and distinct from the activities of its owner and all other economic entities?

Back 17

Economic Entity Assumption

Front 18

What are the three forms of business ownership?

Back 18

-Proprietorship
-Partnership
-Corporation

Front 19

Combining the activities of Kellogg and General Mills would violate what assumption or principle?

Back 19

The Economic Entity Assumption

Front 20

A business organized as a separate legal entity under state law having ownership divided into shares of stock is what type of business ownership?

Back 20

Corporation

Front 21

What provides the underlying framework for recording and summarizing economic events?

Back 21

The basic accounting equation: Assets=Liabilities+Stockholder's Equity

Front 22

What are resources a business owns that provide future services or benefits to a company? List a few examples

Back 22

Assets (Cash, supplies, equipment)

Front 23

What are claims against assets (debts and obligations)? Creditors - party to whom money is owed. List a few examples

Back 23

Liabilities (Accounts Payable, Notes Payable, etc)

Front 24

What is ownership claim on total assets and is referred to as residual equity? List the examples

Back 24

Stockholder's Equity (Common stock and Retained Earnings)

Front 25

What result from business activities entered into for the purpose of earning income?

Back 25

Revenues

Front 26

What are the cost of assets consumed or services used in the process of earning revenue?

Back 26

Expenses

Front 27

What are the distribution of cash or other assets to stockholders?

Back 27

Dividends

Front 28

Dividends reduce retained earnings, however, they are not considered to be ______.

Back 28

Expenses

Front 29

What are a business’s economic events recorded by accountants?

Back 29

Transactions

Front 30

Each transaction has a _____ effect on the accounting equation.

Back 30

Dual

Front 31

What is the expanded accounting equation?

Back 31

Assets= Liabilities + Stockholder's Equity [Common Stock + Retained Earnings(Revenues-Expenses)]

Front 32

What are the four financial statements companies prepare?

Back 32

Income Statement
Retained Earnings Statement
Balance Sheet
Statement of Cash Flows

Front 33

What does an income statement consist of?

Back 33

reports revenues and expenses and determines a net income or net loss

Front 34

What does the retained earnings statement consist of?

Back 34

reports changes in retained earnings

Front 35

What does the balance sheet prove?

Back 35

that assets= liabilities + stockholder's equity; it reports assets, liabilities, common stock, and retained earnings

Front 36

What does the statement of cash flows report?

Back 36

inflows and outflows of cash for a specific time period (will not have to prepare for this class)

Front 37

Net income will result during a time period when:
a)assets exceed liabilities.
b)assets exceed revenues.
c)expenses exceed revenues.
d)revenues exceed expenses

Back 37

d) revenues exceed expenses

Front 38

Which of the following financial statements is prepared as of a specific date?
a)Balance sheet.
b)Income statement.
c)Owner's equity statement.
d)Statement of cash flows

Back 38

a)Balance Sheet