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Exam 1: Accounting Information and Decision Making

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Question 21

True/False

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Cash,inventory,supplies,and buildings are examples of liabilities.

A) True
B) False

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Question 22

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For accounting information to be relevant,it must have which of the following characteristics?

A) Predictive value or confirmatory value.
B) Large in amount and timely.
C) Comparability or consistency.
D) Freedom from material error,neutrality,or completeness.

E) A) and B)
F) A) and C)

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Question 23

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Which of the following statements is NOT correct about the financial statements?

Below is information related to retained earnings for five independent situations.Calculate the answer to each. 1.A company reports an increase in retained earnings of $3,200 and net income of $4,800.What is the amount of dividends? 2.A company reports beginning retained earnings of $1,800,net income of $1,200,and $200 dividends.What is the amount of ending retained earnings? 3.A company reports an increase in retained earnings of $2,500 and dividends of $1,500.What is the amount of net income? 4.A company reports ending retained earnings of $2,700,net income of $900,and dividends of $500.What is the amount of beginning retained earnings? 5.A company reports an increase in retained earnings of $500 and net income of $1,200.What is the amount of dividends?

The major underlying assumptions of accounting include all of the following except:

Which financial statement is typically prepared first?

Which of the following items is reported in the statement of stockholders' equity?

Which of the following is the correct order for preparing the financial statements?

Common stock represents an external source of stockholders' equity,whereas retained earnings represents an internal source.

The balance sheet depicts which of the following equations?

Below is cash flow information for five independent situations.Calculate the answer to each. 1.A company reports operating cash flows of $3,200,investing cash flows of $700,and financing cash flows of -$400.What is the amount of the change in total cash? 2.A company reports operating cash flows of $1,800,investing cash flows of -$400,and financing cash flows of -$1,100.If the beginning cash amount is $500,what is the ending cash amount? 3.A company reports operating cash flows of $700,investing cash flows of $300,and a change in total cash of $100.What is the amount of cash flows from financing activities? 4.A company reports operating cash flows of $600,financing cash flows of $400,and a change in total cash of $100.What is the amount of cash flows from investing activities? 5.A company reports investing cash flows of -$1,400,financing cash flows of $900,and a change in total cash of $200.What is the amount of cash flows from operating activities?

The 1933 Securities Act and the 1934 Securities Exchange Act were designed to restore investor confidence in financial accounting following the stock market crash in 1929.

Which financial accounting number impacts stock prices more than any other single piece of information?

Below is balance sheet information for five independent situations.Calculate the answer to each. 1.A company reports total assets of $2,000 and total liabilities of $900.What is the amount of stockholders' equity? 2.A company reports total liabilities of $2,400 and stockholders' equity of $1,100.What is the amount of total assets? 3.A company reports total assets of $2,700 and total stockholders' equity of $700.What is the amount of total liabilities? 4.A company reports an increase in assets of $1,700 and an increase in liabilities of $400.What is the amount of the change in stockholders' equity? 5.A company reports an increase in liabilities of $300 and a decrease in stockholders' equity of $800.What is the amount of the change in total assets?

Which of the following best describes a revenue?

Financial accounting:

Consider the following account balances of the Shattuck Law Firm as of December 31,2012: $\begin{array} { l r } \text { Accounts Payable } & \$ 4,400 \\\text { Salaries Expense } & 12,800 \\\text { Cash } & 1,700 \\\text { Common Stock } & 2,400 \\\text { Service Revenue } & 8,300 \\\text { Supplies } & 4,300 \\\text { Retained Earnings } & 1,100 \\\text { Utilities Expense } & 5,000\end{array}$ How many of these accounts would appear in Shattuck's 2012 balance sheet?

The International Accounting Standards Board:

Which definition below best describes financial accounting?

Expenses are regular cash payments by a corporation to its stockholders.