Exam 1: Introduction to Financial Statements

U.S. standards are developed by the

Resources owned by a business are referred to as

Which of the following groups uses accounting information to determine whether the company can pay its obligations?

External users of accounting information, like the Internal Revenue Service, are most commonly known as

Retained earnings is

Elston Company compiled the following financial information as of December 31, 2014: Elston's stockholders' equity on December 31, 2014 is

Broadway Corporation's stockholders' equity equals one-fourth of the company's total assets. The company's liabilities are $270,000. What is the amount of the company's stockholders' equity?

Examples of notes are descriptions of the significant accounting policies and methods used in preparing the statements, explanations of contingencies, and various statistics.

Which financial statement would best indicate whether the company relies on debt or stockholders' equity to finance its assets?

Financial accounting ethics violations are

(Communication) Mary Baroni is a friend of yours from high school. She decided to become a beautician after leaving high school, rather than to attend college. She recently opened her own shop, and has contracted her services to a local hospital. She is paid a monthly fee for her services, and receives a small gratuity from each of the patients. She has just received her first set of financial statements from her accountant. She is quite upset. The statements show a cash balance of $3,600 at the end of the month, but a net income of only $500. She has written you a letter, asking you whether such a situation is possible, or whether she should find another accountant. Required: Write a short letter to your friend. Use proper form. Answer her question completely, but briefly.

The balance sheet reports assets and claims to those assets at a specific point in time.

Henson Company began the year with retained earnings of $330,000. During the year, the company recorded revenues of $500,000, expenses of $380,000, and paid dividends of $40,000. What was Henson's retained earnings at the end of the year?

Expenses are incurred

Which of the following financial statements is concerned with the company at a point in time?

Which financial statement is prepared first?

Which three items affect retained earnings, and how do they affect it?

Which of the following clarifies information presented in the financial statements, as well as expanding upon it where additional detail is needed?

Payments to owners are operating activities.

From the following list of selected accounts taken from the records of Schmidt Clinic, identify those that would appear on the balance sheet.