Deck 1: Financial Accounting and Its Economic Context

Question 1

Identify which of the users of financial statement information listed in A through E would most likely desire and/or benefit from the economic aspects listed in items below.You may use each letter more than once or not at all.

-Want to choose a company to earn returns potentially higher than fixed income instruments

A) Bankers
B) potential investors
C) government agencies
D) Customers
E) managers

Answer 1

potential investors

Question 2

Identify which of the users of financial statement information listed in A through E would most likely desire and/or benefit from the economic aspects listed in items below.You may use each letter more than once or not at all.

-Need to predict future cash flows necessary for repayment

A) Bankers
B) potential investors
C) government agencies
D) Customers
E) managers

Answer 2

Bankers

Question 3

Identify which of the users of financial statement information listed in A through E would most likely desire and/or benefit from the economic aspects listed in items below.You may use each letter more than once or not at all.

-Want to determine how much tax a company must pay

A) Bankers
B) potential investors
C) government agencies
D) Customers
E) managers

Answer 3

government agencies

Question 4

Identify which of the users of financial statement information listed in A through E would most likely desire and/or benefit from the economic aspects listed in items below.You may use each letter more than once or not at all.

-Want the best product possible for the money

A) Bankers
B) potential investors
C) government agencies
D) Customers
E) managers

Question 5

Identify which of the users of financial statement information listed in A through E would most likely desire and/or benefit from the economic aspects listed in items below.You may use each letter more than once or not at all.

-Want to maintain a level of compensation

A) Bankers
B) potential investors
C) government agencies
D) Customers
E) managers

Question 6

For each description listed in items below, select the letter of the accounting term (A through F) it best describes.You may use each letter more than once.

-Total measured past growth less the amount distributed to owners

A) Asset
B) Liability
C) Retained earnings
D) Revenue
E) Expenses
F) Equity investment

Question 7

For each description listed in items below, select the letter of the accounting term (A through F) it best describes.You may use each letter more than once.

-A measure of assets generated from the products and services sold

A) Asset
B) Liability
C) Retained earnings
D) Revenue
E) Expenses
F) Equity investment

Question 8

For each description listed in items below, select the letter of the accounting term (A through F) it best describes.You may use each letter more than once.

-Owed and must be paid in the future

A) Asset
B) Liability
C) Retained earnings
D) Revenue
E) Expenses
F) Equity investment

Question 9

For each description listed in items below, select the letter of the accounting term (A through F) it best describes.You may use each letter more than once.

-Amount invested in the firm by its owners

A) Asset
B) Liability
C) Retained earnings
D) Revenue
E) Expenses
F) Equity investment

Question 10

Identify which accounting document(s) listed in A through D would always provide the information indicated in items below.You may use each letter more than once or not at all.Some items may require more than one answer.

-Represents that the financial statements are stated fairly, in all material respects

A) Auditor's report
B) Management letter
C) Financial statements
D) Footnotes

Question 11

Identify which accounting document(s) listed in A through D would always provide the information indicated in items below.You may use each letter more than once or not at all.Some items may require more than one answer.

-Indicates that financial statements were prepared in conformity with GAAP

A) Auditor's report
B) Management letter
C) Financial statements
D) Footnotes

Question 12

Identify which accounting document(s) listed in A through D would always provide the information indicated in items below.You may use each letter more than once or not at all.Some items may require more than one answer.

-Contains assets, liabilities, and equity, as well as income from operations

A) Auditor's report
B) Management letter
C) Financial statements
D) Footnotes

Question 13

Identify which accounting document(s) listed in A through D would always provide the information indicated in items below.You may use each letter more than once or not at all.Some items may require more than one answer.

-Explains certain items on the balance sheet

A) Auditor's report
B) Management letter
C) Financial statements
D) Footnotes

Question 14

Identify which accounting document(s) listed in A through D would always provide the information indicated in items below.You may use each letter more than once or not at all.Some items may require more than one answer.

-An acceptance of responsibility of financial information provided

A) Auditor's report
B) Management letter
C) Financial statements
D) Footnotes

Question 15

Sampson Company has $500 in its checking account.A customer owes Sampson $1,000.The company has store equipment that cost $1,500 and a truck that cost $5,000.Sampson Company owes the bank $3,500 on the truck loan of which one payment of $700 is due in one week, and owes $4,000 to creditors for its monthly operating expenses, including rent, all of which is due in the next 30 days.
A. List Sampson Company's assets and the dollar amount of each.
B. List Sampson Company's liabilities and the dollar amount of each.

Question 16

Connan, Inc.reported the following activities for the year:
·Borrowed $300,000 from the bank to be repaid in 5 years
·Issued stock to investors for $35,000 cash
·Paid dividends to shareholders totaling $10,000
·Purchased equipment by promising to pay $145,000 to a creditor over the next 3 years
A.Identify which activities are debt investments.
B.Identify which activities are equity investments.