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Exam 1: An Introduction to Accounting

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Question 31

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Financial accounting standards are known collectively as GAAP.What does that acronym stand for?

A) Generally Accepted Accounting Principles
B) Generally Applied Accounting Procedures
C) Governmentally Approved Accounting Practices
D) Generally Authorized Auditing Principles

E) A) and D)
F) B) and D)

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Question 32

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Financial accounting information is usually less detailed than managerial accounting information.

A) True
B) False

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Question 33

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Reynolds Company experienced an accounting event that affected its financial statements as indicated below: $\begin{array} { | c | c | c | c | c | } \hline \text { Assets } & = & \text { Liabilities } & + & \begin{array} { c } \text { Stockholders' } \\\text { Equity }\end{array} \\\hline + & = & \text { NA } & + & + \\\hline\end{array}$ Which of the following accounting events could have caused these effects on Reynolds' accounting equation?

In a market,a company that manufactures cars would be referred to as a conversion agent.

Liabilities are obligations of a business to relinquish assets,provide services,or accept other obligations.

Which of the following appears in the investing activities section of the statement of cash flows?

What is the process of dividing up assets and allocating them to resource providers (creditors and investors) ?

Garrison Company acquired $23,000 by issuing common stock.Which of the following accurately reflects how this event affects the company's accounting equation? $\begin{array} { | c | c | c | c | c | c | c | c | } \hline & \text { Assets } & = & \text { Liabilities } & + & \begin{array} { c } \text { Commnn } \\\text { Stuck }\end{array} & + & \begin{array} { c } \text { Retained } \\\text { Earnings }\end{array} \\\hline \text { A } & 23,000 & = & \text { NA } & + & 23,000 & + & \text { NA } \\\hline \text { B. } & \text { NA } & = & 23,000 & + & ( 23,000 ) & + & \text { NA } \\\hline \text { C } & \text { NA } & = & \text { NA } & + & 23,000 & + & ( 23,000 ) \\\hline \text { D. } & 23,000 & = & \text { NA } & + & \text { NA } & + & 23,000 \\\hline\end{array}$

The value created by a business is created by its assets.

The Financial Accounting Standards Board is a privately funded organization with authority for establishing accounting standards for businesses in the US.

Which of the following is not an example of an asset use transaction?

Which financial statement matches asset increases from operating a business with asset decreases from operating the business?

Retained earnings reduces a company's commitment to use its assets for the benefit of its stockholders.

Turner Company reported assets of $20,000 (including cash of $9,000) ,liabilities of $8,000,common stock of $7,000,and retained earnings of $5,000.Based on this information,what can be concluded?

Indicate whether each of the following statements about financial statements is true or false. ________ a)A cash dividend paid to stockholders is reported in the investing activities section of the statement of cash flows. ________ b)A cash dividend paid to stockholders is reported on the statement of changes in stockholders' equity. ________ c)A cash dividend paid to stockholders is reported on the income statement. ________ d)The balance sheet reports the ending balances of permanent accounts as of the last day of the accounting period. ________ e)Changes in retained earnings during the accounting period are reported on the income statement.

[The following information applies to the questions displayed below.] Packard Company engaged in the following transactions during Year 1, its first year of operations: (Assume all transactions are cash transactions.) 1) Acquired $950 cash from the issue of common stock. 2) Borrowed $420 from a bank. 3) Earned $650 of revenues. 4) Paid expenses of $250. "5) Paid a $50 dividend. During Year 2, Packard engaged in the following transactions: (Assume all transactions are cash transactions.) " 1) Issued an additional $325 of common stock. 2) Repaid $220 of its debt to the bank. 3) Earned revenues of $750. 4) Incurred expenses of $360. 5) Paid dividends of $100. -The amount of total liabilities on Packard's Year 1 balance sheet is

Mayberry Company paid $30,000 cash to purchase land.What happened as a result of this business event?

Expenses are reported on which of the following financial statement(s) ?

The stockholders of a business have a priority claim to its assets in the event of liquidation.

Which resource providers lend financial resources to a business with the expectation of repayment with interest?