Intro To Financial Accounting Exam 1 With Complete Solutions 2024

Intro To Financial Accounting Exam 1 With Complete Solutions 2024 Accounting consists of three basic activities - correct answer-Identifies, records, communicates Who uses Accounting Data - correct answer-External Users: Creditors and Investors Recent Financial Scandals - correct answer-Enron, WorldCom, HealthSouth, AIG Sarbanes-Oxley Act of (SOX). - correct answer-Added new criminal charges for accounting scandals Financial Statements - correct answer-Balance Sheet Income Statement Statement of Stock Holder's Equity Statement of Cash Flows Note Disclosure Generally Accepted Accounting Principles (GAAP) - correct answer-Standards generally accepted and universally practiced Standard Setting Bodies - correct answer-Financial Accounting Standards Board (FASB) (SEC) International Accounting Standards Board (IASB) Historical Cost Principle - correct answer-dictates that companies record assets at their cost. Fair Value Principle - correct answer-states that assets and liabilities should be reported at a fair value Monetary Unit Assumption - correct answer-companies include in accounting records only transaction data expressed in money. Economic Entity Assumption - correct answer-Requires that activities of the entity be kept separate and distinct from activities of the owner Combining activities of Kellogg and General Mills would violate? - correct answer-Economic Entity Assumption Corporation - correct answer-Ownership divided into shares of stock Accounting Equation - correct answer-Assets= Liabilities + Stockholder's Equity Assets - correct answer-Resources a business owns Provide future service or benefits Cash, Supplies, Equipment Liabilities - correct answer-Claims against assets (Debts and Obligations) Creditors- Party to whom money is owed Accounts Payable, Notes Payable Stockholder's Equity - correct answer-Ownership claim on total Assets Referred to as residual Equity Common Stock and Retained Earnings Dividends - correct answer-distribution of cash or other assets to stockholders. They reduce retained earnings but are not an expense. Expense - correct answer-are the cost of assets consumed or services used in the process of earning revenue. Transactions - correct answer-Economic events recorded by accountants Income Statement - correct answer-Reports Profitability of the company List Revenues first, followed by expenses Shows net income or net loss Retained Earnings statement - correct answer-Reports changes in retained earnings for same period as income statement Balance Sheet - correct answer-Reports the assets, liabilities, and stockholders' equity at a specific date. Is a snapshot of the company's financial condition at a specific moment in time Statement or Cashflows - correct answer-Where did the cash come from What was it used for What was the change in balance The Account - correct answer-Record of increases and decreases in a specific asset, liability, equity, revenue, or expense Double Entry System - correct answer-Debit one account, credit the other Debits must equal Credits