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Exam 1: Accounting in Business

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Question 91

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The ________________ assumption states that transactions and events are expressed in money units.

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Question 92

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The statement of retained earnings:

A) Reports how retained earnings changes at a point in time.
B) Reports how retained earnings changes over a period of time.
C) Reports on cash flows for operating, financing, and investing activities over a period of time.
D) Reports on cash flows for operating, financing, and investing activities at a point in time.
E) Reports on amounts for assets, liabilities, and equity at a point in time.

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Question 93

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______________ is the area of accounting aimed at serving external users by providing them with general-purpose financial statements.

The Sarbanes-Oxley Act (SOX) requires each issuer of securities to disclose whether it has adopted a code of ethics for its senior financial officers and the contents of that code.

Which of the following purposes would financial statements serve for external users?

The International Accounting Standards Board (IASB) is the government group that establishes reporting requirements for companies that issue stock to the public.

The stockholders' claim on assets, also known as net assets, is called __________________.

An income statement reports on investing and financing activities.

A partnership:

Understanding generally accepted accounting principles is not necessary to effectively use and interpret financial statements.

Generally the lower the risk, the higher the return that can be expected.

Identify the users and uses of accounting information.

The Sarbanes-Oxley Act (SOX) does not require public companies to apply both accounting oversight and stringent internal controls.

Net income occurs when revenues exceed expenses.

The first section of the income statement reports cash flows from operating activities.

______________________, which is one part of accounting, is the recording of transactions and events, either manually or electronically.

Identify the risk and the return in each of the following examples. a. Investing $500 in a certificate of deposit at 4.5% interest. b. Placing a $100 bet on an NBA game. c. Investing $10,000 in Microsoft stock. d. Borrowing $20,000 in student loans.

In the partnership form of business, the owners are called stockholders.

The area of accounting aimed at serving the decision making needs of internal users is:

The monetary unit assumption means that all companies doing business in the United States must express transactions and events in U.S. dollars.