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Exam 1: Accounting Information and Decision Making

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Question 1

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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 2

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

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Question 3

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How does the value of an audit affect financial statements?

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

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.

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

Net income appears in which two financial statements?

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 =

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?

Liabilities are best defined as:

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

Which statement below best describes the objectives of financial accounting?

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

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

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

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

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.

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

Materiality is based upon which factor(s) ?

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