Deck 1: Uses of Accounting Information and the Financial Statements

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Accountants focus on the needs for financial information by both internal and external decision makers.
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The processing stage of accounting is accomplished by the recording of data.
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The terms "bookkeeping" and "accounting" are not synonymous.
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When a corporate stockholder sells his or her shares of stock,the corporation is technically dissolved.
Question
For reporting purposes,the personal assets and debts of a business owner should be combined with the assets and debts of the business.
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The stockholders of a corporation elect the board of directors.
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A partnership is dissolved when any partner leaves the business or dies.
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A corporation is an economic unit that is legally separate from its owners.
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Sole proprietorships in the United States generate more business (in terms of receipts)than partnerships and corporations put together.
Question
The personal resources of any partner can be called upon to pay the obligations of the partnership.
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The liability of corporate stockholders is limited to their percentage share of ownership.
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The day-by-day accumulation of interest is considered a transaction involving an exchange of value.
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Accountants consider money the common unit of measure for all business transactions.
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Payment to a creditor is an example of a nonexchange business transaction.
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In general,one partner acting alone cannot obligate the partnership to another party.
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Knowledge of the exchange rate is necessary to apply the money measure concept in case of international transactions.
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A company's management information system is a subsystem of its accounting information system.
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For accounting purposes,a business and its owner are considered the same entity.
Question
Corporations represent the largest number of businesses in the United States.
Question
Exchange rates for currency change daily according to the supply and demand for each currency.
Question
Accounts Receivable is an asset that is considered nonmonetary in nature.
Question
Net income is another term for revenues.
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The obligation to provide services to another entity is a type of liability.
Question
Dividends are an example of an expense.
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One way of stating the accounting equation is: Assets - Liabilities = Stockholders' Equity.
Question
Authorized shares of stock refer to the number of shares currently held by the stockholders.
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The number of authorized shares of stock may be less than the number of outstanding shares.
Question
Inventory is an example of a nonmonetary asset.
Question
Equity is increased when net income exceeds dividend distributions.
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The management of a corporation is responsible for electing the board of directors.
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Financial position may be assessed by referring to a balance sheet.
Question
Cash is another term for stockholders' equity.
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The articles of incorporation may be found in the corporate charter.
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The board of directors carries out the day-to-day operations of a corporation.
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Stockholders' equity equals assets minus liabilities.
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The board of directors appoints the audit committee,which in turn performs an independent audit of the company's records.
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Net assets equal stockholders' equity.
Question
Corporate governance is the oversight of a company's management performance and ethics by its board of directors.
Question
Creditors' equities is another term for liabilities.
Question
The economic resources invested in a business by the owners are represented by stockholders' equity.
Question
The statement of cash flows discloses significant events related to the operating,investing,and financing activities of a business.
Question
Companies whose securities are sold to the general public must adhere to standards established by the Securities and Exchange Commission.
Question
Independence means subordinating personal gain to service and the public trust.
Question
The board of directors appoints the audit committee,which in turn performs an independent audit of the company's records.
Question
The Public Company Accounting Oversight Board (PCAOB)was created to determine the standards that auditors must follow.
Question
The account 'Wages Payable' would appear on the income statement.
Question
Revenues have the effect of increasing stockholders' equity.
Question
An increase in expenses will have the effect of reducing stockholders' equity.
Question
Generally accepted accounting principles encompass the conventions,rules,and procedures necessary to define accepted accounting practice at a particular time.
Question
The International Accounting Standards Board is the primary and most important determinant of generally accepted accounting principles.
Question
The statement of retained earnings discloses the dividends distributed during the period.
Question
A proper heading for the income statement could include "For the Year Ended December 31,20--."
Question
The expenses incurred by an accounting firm would appear on its balance sheet.
Question
Due care means carrying out one's professional responsibilities with competence and diligence.
Question
The balance sheet is also known as the statement of financial position.
Question
The heading for a balance sheet might include the line "For the Month Ended December 31,20--."
Question
The purchase of land with cash would be disclosed on the statement of cash flows.
Question
The Supplies Inventory account will appear as an expense on the income statement.
Question
The statement of retained earnings relates the income statement to the balance sheet by showing how the Retained Earnings account changed during the accounting period.
Question
The Internal Revenue Service is responsible for issuing accounting standards for state and local governments.
Question
Financing a business means obtaining funds so the business can begin and continue operating.
Question
Less than 20 percent of the U.S.economy is generated by governmental and not-for-profit organizations.
Question
The primary external users of accounting information are investors and management.
Question
Regulatory agencies are considered information users with an indirect financial interest.
Question
Paying taxes to the government is an example of an operating activity.
Question
Objectivity is the avoidance of all relationships that impair or appear to impair the objectivity of the accountant.
Question
The purchase of equipment is an example of an investing activity.
Question
Two major goals of business are to achieve profitability and to achieve liquidity.
Question
Net income is a measure of profitability.
Question
Accounting ratios are useful as management performance measures.
Question
Taxing authorities are considered accounting information users with a direct financial interest in a business.
Question
Liquidity means not having enough funds on hand to pay debts when they fall due.
Question
Creditors are those who lend money to others or deliver goods and services before being paid.
Question
Both public accountants and managerial accountants are required to adhere to a code of professional conduct.
Question
Financial accounting information is used primarily by management.
Question
Not-for-profit organizations have no obligation to report their financial performance to outside parties.
Question
Managerial accounting focuses on internal decision making.
Question
A business using cash to expand by purchasing land and a building is an example of an operating activity.
Question
The Federal Reserve Board is an example of a consumer group.
Question
The Securities and Exchange Commission is an accounting information user with an indirect financial interest in a business.
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Deck 1: Uses of Accounting Information and the Financial Statements
1
Accountants focus on the needs for financial information by both internal and external decision makers.
True
2
The processing stage of accounting is accomplished by the recording of data.
False
3
The terms "bookkeeping" and "accounting" are not synonymous.
True
4
When a corporate stockholder sells his or her shares of stock,the corporation is technically dissolved.
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5
For reporting purposes,the personal assets and debts of a business owner should be combined with the assets and debts of the business.
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6
The stockholders of a corporation elect the board of directors.
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7
A partnership is dissolved when any partner leaves the business or dies.
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8
A corporation is an economic unit that is legally separate from its owners.
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9
Sole proprietorships in the United States generate more business (in terms of receipts)than partnerships and corporations put together.
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10
The personal resources of any partner can be called upon to pay the obligations of the partnership.
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11
The liability of corporate stockholders is limited to their percentage share of ownership.
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12
The day-by-day accumulation of interest is considered a transaction involving an exchange of value.
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13
Accountants consider money the common unit of measure for all business transactions.
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14
Payment to a creditor is an example of a nonexchange business transaction.
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15
In general,one partner acting alone cannot obligate the partnership to another party.
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16
Knowledge of the exchange rate is necessary to apply the money measure concept in case of international transactions.
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17
A company's management information system is a subsystem of its accounting information system.
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18
For accounting purposes,a business and its owner are considered the same entity.
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19
Corporations represent the largest number of businesses in the United States.
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20
Exchange rates for currency change daily according to the supply and demand for each currency.
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21
Accounts Receivable is an asset that is considered nonmonetary in nature.
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22
Net income is another term for revenues.
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23
The obligation to provide services to another entity is a type of liability.
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24
Dividends are an example of an expense.
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25
One way of stating the accounting equation is: Assets - Liabilities = Stockholders' Equity.
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26
Authorized shares of stock refer to the number of shares currently held by the stockholders.
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27
The number of authorized shares of stock may be less than the number of outstanding shares.
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28
Inventory is an example of a nonmonetary asset.
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29
Equity is increased when net income exceeds dividend distributions.
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30
The management of a corporation is responsible for electing the board of directors.
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31
Financial position may be assessed by referring to a balance sheet.
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32
Cash is another term for stockholders' equity.
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33
The articles of incorporation may be found in the corporate charter.
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34
The board of directors carries out the day-to-day operations of a corporation.
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35
Stockholders' equity equals assets minus liabilities.
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36
The board of directors appoints the audit committee,which in turn performs an independent audit of the company's records.
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37
Net assets equal stockholders' equity.
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38
Corporate governance is the oversight of a company's management performance and ethics by its board of directors.
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39
Creditors' equities is another term for liabilities.
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40
The economic resources invested in a business by the owners are represented by stockholders' equity.
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41
The statement of cash flows discloses significant events related to the operating,investing,and financing activities of a business.
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42
Companies whose securities are sold to the general public must adhere to standards established by the Securities and Exchange Commission.
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43
Independence means subordinating personal gain to service and the public trust.
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44
The board of directors appoints the audit committee,which in turn performs an independent audit of the company's records.
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45
The Public Company Accounting Oversight Board (PCAOB)was created to determine the standards that auditors must follow.
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46
The account 'Wages Payable' would appear on the income statement.
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47
Revenues have the effect of increasing stockholders' equity.
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48
An increase in expenses will have the effect of reducing stockholders' equity.
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49
Generally accepted accounting principles encompass the conventions,rules,and procedures necessary to define accepted accounting practice at a particular time.
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50
The International Accounting Standards Board is the primary and most important determinant of generally accepted accounting principles.
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51
The statement of retained earnings discloses the dividends distributed during the period.
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52
A proper heading for the income statement could include "For the Year Ended December 31,20--."
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53
The expenses incurred by an accounting firm would appear on its balance sheet.
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54
Due care means carrying out one's professional responsibilities with competence and diligence.
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55
The balance sheet is also known as the statement of financial position.
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56
The heading for a balance sheet might include the line "For the Month Ended December 31,20--."
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57
The purchase of land with cash would be disclosed on the statement of cash flows.
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58
The Supplies Inventory account will appear as an expense on the income statement.
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59
The statement of retained earnings relates the income statement to the balance sheet by showing how the Retained Earnings account changed during the accounting period.
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60
The Internal Revenue Service is responsible for issuing accounting standards for state and local governments.
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61
Financing a business means obtaining funds so the business can begin and continue operating.
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62
Less than 20 percent of the U.S.economy is generated by governmental and not-for-profit organizations.
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63
The primary external users of accounting information are investors and management.
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64
Regulatory agencies are considered information users with an indirect financial interest.
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65
Paying taxes to the government is an example of an operating activity.
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66
Objectivity is the avoidance of all relationships that impair or appear to impair the objectivity of the accountant.
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67
The purchase of equipment is an example of an investing activity.
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68
Two major goals of business are to achieve profitability and to achieve liquidity.
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69
Net income is a measure of profitability.
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70
Accounting ratios are useful as management performance measures.
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71
Taxing authorities are considered accounting information users with a direct financial interest in a business.
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72
Liquidity means not having enough funds on hand to pay debts when they fall due.
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73
Creditors are those who lend money to others or deliver goods and services before being paid.
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74
Both public accountants and managerial accountants are required to adhere to a code of professional conduct.
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75
Financial accounting information is used primarily by management.
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76
Not-for-profit organizations have no obligation to report their financial performance to outside parties.
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77
Managerial accounting focuses on internal decision making.
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78
A business using cash to expand by purchasing land and a building is an example of an operating activity.
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79
The Federal Reserve Board is an example of a consumer group.
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80
The Securities and Exchange Commission is an accounting information user with an indirect financial interest in a business.
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