SB CHP.2 ACCY 200 EXAM 1 Verified Solutions

SB CHP.2 ACCY 200 EXAM 1 Verified Solutions ________________ principle in accounting relates to making judgments and estimates that result in lower profits and asset valuation estimates rather than higher profits and asset valuation estimates. ️Conservatism _________means that absolute exactness is not necessary in the amounts shown in the financial statements. ️materiality A corporation's annual report contains the reporting firm's financial statements and each of the following key components, except: ️the reporting firm's operating budget for the next fiscal year A firm prepares comparative financial statement so that _____. ️the users of the data can easily spot changes in the firm's financial position and in its results of operations An entity's earnings for a reporting period are reported on the: ️income statement An entity's financial position at the end of a reporting period is reported on the: ️balance sheet Companies are not allowed to switch back and forth between alternative accounting methods from year to year because of the ___________ concept. ️consistency Financial statements that show a column for the current year and the prior year are known as _________ financial statements. ️comparative Identify the information that the current generally accepted accounting principles and auditing standards require the financial statements of an entity to show for the reporting period. ️Earnings for the period Cash flows during the period Financial position at the end of the period Investments by and distributions to owners (i.e., stockholders) during the period If the total assets is equal to $10,000, and the total stockholders' equity is equal to $3,000, then: ️the total liabilities is equal to $7,000 If the total assets is equal to $15,000 and the total liabilities is equal to $9,000, then: ️the total stockholders' equity is equal to $6,000. If the total liabilities is equal to $8,000 and the total stockholders' equity is equal to $4,000, then: ️the total assets is equal to $12,000 Providing more (rather than less) detail in the notes to the financial statements is driven by which of the following concepts/principles? ️Full disclosure The ___________ concept requires that the financial statements and notes include all necessary information to prevent a reasonably astute user of the financial statements from being misled. ️full disclosure The balance sheet equation: ️is another term for the accounting equation. must remain in balance after each transaction is recorded. can be expressed as A = L + SE The balance sheet is a listing of the organization's: ️assets, liabilities, and stockholders' equity The four concepts/principles that relate to bookkeeping procedures and the accounting process are: ️accounting period, matching, revenue recognition, and accrual The four concepts/principles that relate to the financial statements are: ️consistency, full disclos