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Exam 1: Accounting Information and Decision Making

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Question 81

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Which of the following is not a balance sheet item?

A) Assets.
B) Common stock.
C) Retained earnings.
D) Revenues.

E) A) and C)
F) A) and B)

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Question 82

Multiple Choice

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Accounting information that does not provide measurement bias in favor of a particular set of companies has the characteristic of:

A) Relevance.
B) Consistency.
C) Materiality.
D) Neutrality.

E) A) and B)
F) All of the above

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Question 83

Multiple Choice

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The qualitative characteristic that says accounting information can influence users' decisions by allowing them to assess past performance is:

The ending Retained Earnings balance of Boomer Inc.decreased by $1.0 million from the beginning of the year.The company declared a dividend of $5.4 million during the year.What was the net income earned during the year?

Consider the following account balances of the Shattuck Law Firm as of December 31,2012: How many of these accounts would appear in Shattuck's 2012 income statement? $\begin{array} { l r } \text { Accounts Payable } & \$ 4,400 \\\text { Salaries Expense } & 12,800 \\\text { Cash } & 1,700 \\\text { Common Stock } & 2,400 \\\text { Service Revenue } & 8,300 \\\text { Supplies } & 4,300 \\\text { Retained Earnings } & 1,100 \\\text { Utilities Expense } & 5,000\end{array}$

Which of the following items would not appear in an income statement?

Below are the account balances for Huffman Corporation at the end of December.Use only the appropriate accounts to prepare an income statement. $\begin{array} { l r } { \text { Accounts } } & \text { Balances } \\\hline \text { Cash } & \$ 5,200 \\\text { Salaries expense } & 2,300 \\\text { Retained earnings } & 2,500 \\\text { Advertising expense } & 1,200 \\\text { Equipment } & 12,400 \\\text { Service revenue } & 9,400 \\\text { Common stock } & 8,000 \\\text { Accounts payable } & 2,200\end{array}$

The equation best describing the income statement is:

The account type that represents payments to stockholders is called:

Amounts owed to suppliers,workers,governments,and utility companies are examples of liabilities.

Investing activities include the purchase and sale of (1)long-term resources and (2)any resources not directly related to a company's normal operations.

The accounts that represent resources owed to creditors are called:

Primary qualitative characteristics of accounting information are:

One disadvantage of the corporate form of business is:

List and describe the four financial statements most frequently provided to external users.

Aikman Company has paid dividends of $2,410,$0,$1,570 and $1,060 over the first four years of the company's existence.If Retained Earnings after year four has an ending balance of $9,700,what is the average annual amount of net income (loss) over the past four years for Aikman?

Financing cash flows include cash transactions with lenders,such as borrowing money and repaying debt,and with stockholders,such as issuing stock and paying dividends.

The financial statement that represents activity over the entire life of the company is the:

Net income can best be described as:

Generally Accepted Accounting Principles (GAAP) are best defined as: