Financial Accounting BA211 Exam Questions with Correct Answers
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Course
Financial Accounting
Institution
Financial Accounting
Sole Proprietorship - Answer-Business organization owned by one person. The owner is personally liable for all debts of the business.
Partnership - Answer-Business organization owned by two or more people. Each partner is personally liable for all debts of the business.
Corporation - Answer-A...
Financial Accounting BA211 Exam
Questions with Correct Answers
Sole Proprietorship - Answer-Business organization owned by one person. The owner is
personally liable for all debts of the business.
Partnership - Answer-Business organization owned by two or more people. Each
partner is personally liable for all debts of the business.
Corporation - Answer-A separate legal entity. Owners of corporations (stockholders) are
not personally liable for debts of the corporation.
Percent of Organizational Types - Answer-72% - Sole Proprietorship
18% - Corp
6% - LLC
4% - Partnerships
Accounting is... - Answer-analyzing, recording, summarizing and reporting results of
business activities
Financial reports go to... - Answer-External users such as investors, creditors,
government and directors.
Managerial reports go to... - Answer-Internal users such as managers and supervisors.
(Resources owned = resources owed to creditors + resources owed to stockholders)
Examples of assets - Answer-Cash, supplies, furniture, equipment.
Examples of liabilities - Answer-Notes payable, accounts payable
Common Stock - Answer-equity paid in by stockholders
Retained Earnings - Answer-equity earned by the company
Stockholders' Equity - Answer-Owners' claims to the business resources
- Answer-Revenue - Expenses = Net Income
Dividends are not an expense - Answer-
Financial Statements in order - Answer-Incomes Statement
,Statement of Retained Earnings
Balance Sheet
Statement of Cash Flows
The unit of measure assumption - Answer-results of business activities should be
reported in an appropriate monetary unit
Statement of Retained Earnings - Answer-Reports the way that net income and the
distribution of dividends affected the financial position of the company during the period
Balance Sheet - Answer-Report at a point in time: assets, liabilities, equity
Statement of Cash Flows - Answer-summarizes how a business is operating, investing
and financing.
Net income from Income Statement - Answer-Helps determine ending Retained
Earnings
Retained Earnings are reporting on - Answer-The Balance Sheet
Cash on Balance Sheet equals - Answer-Ending Cash on Cash Flows
External Financial Reporting should be - Answer-Timely, verifiable, comparable,
understandable
Accounting Standard for USA - Answer-FASB > GAAP
Accounting standards for the rest of the world - Answer-IASB > IFRS
Ethical conduct process - Answer--Identify who is affected
-Identify and eval courses of action
-Choose most ethical
Accounting benefits which departments - Answer--Production/operations
-Human resources
-finance
-marketing
Pros for going public - Answer--keeps money from issuing shares
-can raise more money by releasing more shares
-can pay employees with shares
-holders and given a way to sell shares
-can purchase other companies with shares instead of cash
Cons for going public - Answer--more public reporting of events affecting company
-increased accounting disclosures
,-higher risk of litigation for misstatements and omissions
Timing of public reporting - Answer-1. press releases
2. reports
3. SEC filings
Which of the following would be classified as a stockholders' equity account?
Accounts Payable
Cash
Common Stock
Service Revenue
Retained Earnings - Answer-Accounts Payable
Cash
Common Stock
Service Revenue
Retained Earnings
Which of the following financial statements reports changes the amount of net income
and dividends declared during the period?
Balance sheet
Balance sheet and income statement
Statement of retained earnings
Balance sheet and statement of retained earnings - Answer-Statement of retained
earnings
Which of the following financial statements reports assets, liabilities, and retained
earnings?
Balance sheet
Income statement
Statement of cash flows
Statement of retained earnings - Answer-
Which of the following activities is not a category reported on the Statement of Cash
Flows?
Where do creditors and investors obtain information to make decision concerning a
company? - Answer-Financial statements
Which of the following questions are of primary interest to a company's creditors?
, Does the company have enough assets to cover its liabilities?
How long has the company been operating?
Is the company is generating enough cash to pay what it owes?
Is the company profitable? - Answer-Does the company have enough assets to cover its
liabilities?
Is the company is generating enough cash to pay what it owes?
Which of the following are expected by investors?
-A return on their contributions to the company
-Immediate returns through dividends
-Long-term returns through selling their stock certificates at a price higher than their
original cost
-That the company has enough assets to cover its liabilities - Answer--A return on their
contributions to the company
-Immediate returns through dividends
-Long-term returns through selling their stock certificates at a price higher than their
original cost
Which body determines the rules that are used in the United States for reporting
accounting information and producing financial statements? - Answer-the SEC
Which of the following enhance the usefulness of financial information?
Obtaining a loan would be an example of a(n): - Answer-Financing activity
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