A100 Chapter 1 Study Guide with Practice Questions
and Correct Answers
Accounting - CORRECT ANSWER -recording of business transactions, the
preparation of reports summarizing these transactions, and the analyzing of
financial information.
Financial Statement - CORRECT ANSWER -The reports prepared from the
accounting system
Financial Accounting - CORRECT ANSWER -specifically to the records and related
reports that are available to people outside of the company.
impact on the financial statements - CORRECT ANSWER -is looking at the financial
statements from the top down and paying particular attention to how various
transactions impact the financial statements.
Financing Activities - CORRECT ANSWER -transactions that raise funds for the
company to operate or expand
Investing Activities - CORRECT ANSWER -transactions in which the company is
investing in assets that it will keep in the business to use in its operations
Operating Activities - CORRECT ANSWER -all of the other transactions that a
business engages in which cannot specifically be classified as financing or
investing
Ex// Payment of rent, salaries, insurance expenses
, 3 types of business transactions - CORRECT ANSWER -financing activities, investing
activities, and operating activities
Equity - CORRECT ANSWER -ownership
equity investors/stockholders/shareholders - CORRECT ANSWER -purchasers of
the stock
directors - CORRECT ANSWER -job is to represent the stockholders' interest to
management and to protect the stockholders' investment.
board of directors - CORRECT ANSWER -a group of persons elected by the
stockholders to manage a corporation
2 basic rights of the stock holders - CORRECT ANSWER -1. Vote on directors
2. receive dividends
Dividends - CORRECT ANSWER -are payments made from the corporation to its
stockholders; not legally required to pay
ways to get money back as an investor - CORRECT ANSWER -1. receive dividends
2. sell your stock at a higher price than purchased
and Correct Answers
Accounting - CORRECT ANSWER -recording of business transactions, the
preparation of reports summarizing these transactions, and the analyzing of
financial information.
Financial Statement - CORRECT ANSWER -The reports prepared from the
accounting system
Financial Accounting - CORRECT ANSWER -specifically to the records and related
reports that are available to people outside of the company.
impact on the financial statements - CORRECT ANSWER -is looking at the financial
statements from the top down and paying particular attention to how various
transactions impact the financial statements.
Financing Activities - CORRECT ANSWER -transactions that raise funds for the
company to operate or expand
Investing Activities - CORRECT ANSWER -transactions in which the company is
investing in assets that it will keep in the business to use in its operations
Operating Activities - CORRECT ANSWER -all of the other transactions that a
business engages in which cannot specifically be classified as financing or
investing
Ex// Payment of rent, salaries, insurance expenses
, 3 types of business transactions - CORRECT ANSWER -financing activities, investing
activities, and operating activities
Equity - CORRECT ANSWER -ownership
equity investors/stockholders/shareholders - CORRECT ANSWER -purchasers of
the stock
directors - CORRECT ANSWER -job is to represent the stockholders' interest to
management and to protect the stockholders' investment.
board of directors - CORRECT ANSWER -a group of persons elected by the
stockholders to manage a corporation
2 basic rights of the stock holders - CORRECT ANSWER -1. Vote on directors
2. receive dividends
Dividends - CORRECT ANSWER -are payments made from the corporation to its
stockholders; not legally required to pay
ways to get money back as an investor - CORRECT ANSWER -1. receive dividends
2. sell your stock at a higher price than purchased
