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ACCOUNTING FINALEXAMFRIDAY, MAY 11 @ 7:30AMENTERPRISE 8040-50 MULTIPLE CHOICE QUESTIONS2 WRITING QUESTIONS (CH.10 BONDS & CH.12 STATEMENT OF CASHFLOWS)
HOW TO PREPARE:•Multiple choice at the end of the chapter•Demonstration cases at the end of the chapter•LEARNSMART•Supplemental Homework
FINANCIAL ACCOUNTING VS. MANAGERIALACCOUNTING•Financial Accounting – periodic financial statements and relateddisclosures used so external decision makers can evaluate thecompany•Managerial Accounting – detailed plans and continuous performancereports so internal decision makers can run the company
CHAPTER 1•Accounting Equation•Assets = Liabilities + Stockholders’ Equity•Interconnections among Financial Statements•(3) Balance Sheet – statement of financial position that reports dollar amounts for theassets, liabilities, and stockholders’ equity at a specific point in time•(1) Income Statement – statement of operations tat reports revenues, expenses, and netincome for a stated period of time•(2) Statement of Stockholders’ Equity – explains changes in stockholders’ equity accounts(common stock and retained earnings) that occurred during a specific period of time•Statement of Cash Flows – reports inflows and outflows of cash for a stated period of time•Generally Accepted Accounting Principles (GAAP) – the rules that determine thecontent and measurement rules of the statements.
CHAPTER 1 TERMS•Accounting – system that collects and processes financial information about anorganization’s business activities and reports that information to decisionmakers.•Accounting Entity – the organization for which financial data are to be collected.•Audit – an examination of the financial reports to ensure that they representwhat they claim and conform with GAAP.•Notes (Footnotes) – provide supplemental information about the financialcondition of a company, without which the financial statements cannot be fullyunderstood.
CHAPTER 2•Objective of financial reporting to external users is to provide financial information about thereporting entity that is useful to existing and potential investors, lenders, and other creditors inmaking decisions about providing resources to the entity.•Useful Financial Information – relevance and faithful representation•Balance Sheet•Assets – probable future economic benefits owned or controlled by the entity as a result of pasttransactions•Liabilities – probable future sacrifices of economic benefits arising from present obligations of abusiness as a result of past transactions•Stockholders’ Equity – residual interest of owners in the assets of the entity after settling liabilities; thefinancing is provided by the owners (contributed capital) and by business operations (earned capital).