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Exam 1: Accounting Information and Decision Making

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Question 1

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The costs of advertising,utilities,and salaries in the current reporting period are examples of liabilities.

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Question 2

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Transactions of a company that include the purchase and sale of long-term productive assets are referred to as:

A) Investing activities.
B) Financing activities.
C) Expenditure activities.
D) Operating activities.

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Question 3

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Which of the following accounts appears in the statement of stockholders' equity?

Net income appears in which two financial statements?

Nina Corp.had the following net income (loss) the first three years of operation: $7,100,($1,600) ,and $3,600.If the Retained Earnings balance at the end of year three is $1,100,what was the total amount of dividends paid over these three years?

Which of the following accounts appears in the statement of stockholders' equity?

All cash transactions reported in the statement of cash flows are classified as either (1)operating activities,(2)investing activities,or (3)financing activities.

Public accounting firms are professional service firms that traditionally have focused on three areas: auditing,tax preparation/planning,and business consulting.

How does the value of an audit affect financial statements?

Liabilities are best defined as:

Accounting is a system of maintaining records of a company's operations and communicating this information to decision makers.

In what order are the following financial statements prepared: (1) balance sheet,(2) income statement,and (3) statement of stockholders' equity?

Given the information below about David Corporation,what was the amount of dividends the company paid in the current period? $\begin{array} { | l | l | } \hline \text { Beginning retained earnings } & \$ 35,000 \\\hline \text { Ending retained earnings } & \$ 90,000 \\\hline \text { Increase in cash } & \$ 25,000 \\\hline \text { Net income } & \$ 85,000 \\\hline \text { Change in stockholders' equity } & \$ 20,000 \\\hline\end{array}$

Riley Incorporated reports the following amounts at the end of the year: $\begin{array} { l r l r } \text { Cash } & \$ 3,200 & \text { Service Revenue } & \$ 92,500 \\\text { Buildings } & 60,000 & \text { Salaries Expense } & 72,800 \\\text { Accounts Payable } & 8,500 & \text { Equipment } & 72,000 \\\text { Interest Expense } & 4,000 & \text { Supplies } & 6,400 \\\text { Advertising Expense } & 11,300 & \text { Notes payable } & 40,000\end{array}$ In addition,the company had common stock of $65,000 at the beginning of the year and issued an additional $5,000 during the year.The company also had retained earnings of $20,700 at the beginning of the year and paid dividends of $2,000 during the year.Prepare the income statement,statement of stockholders' equity,and balance sheet.

Financial statements are periodic reports published by the company for the purpose of providing information to managers.

The 1934 act gives the Securities and Exchange Commission (SEC)the power to require companies with publicly traded securities to prepare periodic financial statements for distribution to investors and creditors.

If total change in cash = $44,000,net operating cash flows = $22,000,and net investing cash flows = ($13,000) ; then net financing cash flows =

The form of business organization that is legally separate from its owners is a:

Materiality is based upon which factor(s) ?

Which statement below best describes the objectives of financial accounting?