ACC 210 Test 1

acct. info reported to external users

acct. info reported to internal users

acct. info reported to taxing authorities

acct. info reported to govt. regulatory agencies

What does FASB stand for?

What does SEC stand for?

organization that influences financial reporting with US companies and international companies that trade stock in US only

organization that influences financial reporting with international companies

The FASB establishes reporting practices for ________ accounting.

Name the 4 financial statements that summarize business activities.

Gives a company snapshot (shows one day)

reports resources (assets) and groups that have claims to resources (liabilities, S/E)

Accounts payable, accrued liabilities, and unearned or deferred revenue are examples of _________ liabilities.

List the 3 categories of S/E.

reports revenues and expenses generated for a given period

net income is the difference between:

Gross margin (or profit) equals:

reports changes in retained earnings for a given period

earnings that have not been distributed to owners/stockholders

True or False.

Companies that are in growth mode typically don't pay dividends.

reports changes in cash for a given period

The statement of cash flows divides cash flows into what three activities?

Which statement(s) are based on accrual acct.?

Which statement(s) are based on cash basis acct.?

Dividends are reported on which statement?

Which statement(s) are based on a period of time?

What is the accounting eqn?

Which financial statement reports the acct. eqn?

List the goals of financial reporting in order of most importance.

Describe the financial reporting goal of relevance.

Name the assumption.
assume we can put everything into dollars (monetary units)

Name the assumption.
GM brands include Chrysler, Buick, Chevy, etc., which are separate legal entities
BUT GM reports one financial statement (treat as one economic entity)

Name the assumption.
Time periods are smaller intervals when companies report acct.

Name the assumption.
Assume a company will last indefinitely

Name the principle.
use whatever initial transaction price was

Name the principle.
record revenue when it has been earned and we think we'll get cash eventually

Name the principle.
record expenses when you benefit from the expense

Name the principle.
if we're uncertain, then let's be conservative (record as if worst case scenario occurs)

Name the principle.
disclose everything - nothing misleading

Using the initial purchase price of an item to report it in financial statements is an application of what principle?

business activities are recorded when cash is exchanged

business activities are recorded when they occur not when cash is exchanged

The revenue recognition principle and the matching principle fall under the category of which type of acct.?

Operating, Investing, or Financing?
liabilities and S/E

Operating, Investing, or Financing?
office furniture, buildings

cash, accounts receivable, supplies

If the business activity does not hit R/E, it will NOT be on which statements?

Which organizational structure?
formation is simple and relatively inexpensive
limited financial and human resources
owner is personally liable for obligations of business

Which organizational structure?
owned by 2 or more individuals
must establish rights and obligations of all owners
expanded financial and human resources

Which organizational structure?
owned by one or more
organized under laws of particular state
legally separate from owners
expanded financial and human resources

Which organizational structure allows owner(s) to have most control?

The following describe which organizational structure(s)?
owner(s) pay taxes of business
issues w/ transfer of business

In a corporation, who pays the taxes of the business?

The following describe which organizational structure(s)?
dividends get taxed (double taxation)
less control as an owner

LLC or LLP?
all owners are limited to investment in business for any lawsuits (no matter who does wrong)

LLC or LLP?
if I'm personally performing the work, I am liable
if someone else is performing the work, I am not liable

Which would most likely be used by accountants and lawyers?

LLC or LLP

Name the type of business.
take raw materials and convert to finished product

Name the type of business.
sells a tangible product to customers

Which is a service company?
Bank of America
Caterpillar
Harris Teeter
Target

Name the 2 categories of business strategies.

Name the business strategy.
provide services at best price possible, low cost, compete most on price

Name the business strategy.
does not want to compete on price, wants to compete on some other value (ex: Belk - competes on quality, service)

Sale of furniture by a furniture manufacturing company would be classified as a(n) ________ activity.

A business that receives cash from a customer will:
credit or debit cash?

max number of shares a business may issue in each class of stock

number of shares actually sold to stockholders

number of issued shares that are actually in the hands of stockholders (number of shares issued is diminished when firms reacquire their own stock)

Common stock or preferred stock?

vote in election of board of directors
share in profits and dividends
keep same percentage of ownership if new stock is issued
if liquidation occurs, share in assets in proportion to stock holdings

In what type of stock do stockholders benefit from stock appreciation and dividends?

True or False.
Common stockholders are only paid after the creditors and preferred stockholders are paid in full.

Common stock or preferred stock?

dividend preferences (dividends can be equated to interest payments)
a less risky investment
no voting rights
priority upon liquidation

Name the type of dividend preference for preferred stockholders.
only have preferences for current year

Name the type of dividend preference for preferred stockholders.
preferences for current year and past years (if company did not pay in past years)

Name the type of dividend preference for preferred stockholders.
get to participate in dividends above standard amount

Preferred stockholders are given the convertibility provision, which gives them the option to do what?

Preferred stockholders must follow the call provision, which means what?

minimum amount you have to pay for stock (min. owners are liable for)

True or False.
The issuance of 1000 shares of $1 par value common stock for $12 cash per share would include a debit to PIC excess par for $11000.

Purchasing treasury stock raises or lowers the selling price of stock?

Cash dividends are typically given out by what types of companies?

A _____ dividend is usually given out by growth companies (to reduce the price so that more people can buy).

date company has liability to pay dividends (decision made by board of directors)

buy stock a few days before the date of record

who is owning stock on that particular date

the day dividends gets distributed to owners in the form of cash

The liability for dividends is recognized on the:

If it is a small stock dividend (<20%), the journal entry is based on _____ value.

If it is a large stock dividend (>25%), the journal entry is based on _____ value.

True or False.
There is a journal entry that is necessary to record a stock split.

The objective of stock splits is to _____ the market price of stock to maintain active trading market for stock.

Which business activity will reduce the balance in total S/E?
cash dividends
stock dividend
stock split

Name the ratio.
net income/avg. total S/E
- tells you return for owners

Name the ratio.
dividend/market price of stock
- tells you how much company is paying out in dividends as percent of stock price

Name the ratio.
net income/avg. outstanding shares

Name the ratio.
dividend/earnings per share
- tells you, of their earnings, how much a company is paying its owners