ACCT 201a, Test 1, Ch. 1-4
comprehensive Questions and Answers
with Verified Solutions
Question 1:
What did the Sarbanes- Oxley Act (SOX) create?
Answer:
-was passed by congress to reduce unethical corporate behavior and
decrease likelihood of future corporate scandals -as a result, increased
independence of outside auditors who review accuracy of corporate
financial statements. -Also, management must now certify the accuracy
of financial info.
Question 2:
what are financing activities?
Answer:
-borrowing from creditors ----liabilities are amounts owed to creditors
----note payable (bank loan) ----bonds payable (debt securities) -selling
shares of stock to investors ----common stock(total amount paid in by
stockholders for the shares they purchased) ----dividends (payments to
stockholders)
Question 3:
what are investing activities?
Answer:
-purchase of resources (assets) needed to operate the business -land,
building, equipment, cash, and investments in debt or equity securities of
another company
, Question 4:
what are operating activities?
Answer:
primary activities for which the organization is in business -revenue,
expenses, net income, and net loss
Question 5:
what are creditors?
Answer:
persons or entities to whom the company owes money
Question 6:
what are bonds payable?
Answer:
debt securities sold to investors that must be repaid at a particular date
some years in the future -liability
Question 7:
What is an income statement
Answer:
-report's a company's revenues and expenses and resulting net income
or loss for a specific PERIOD of time
comprehensive Questions and Answers
with Verified Solutions
Question 1:
What did the Sarbanes- Oxley Act (SOX) create?
Answer:
-was passed by congress to reduce unethical corporate behavior and
decrease likelihood of future corporate scandals -as a result, increased
independence of outside auditors who review accuracy of corporate
financial statements. -Also, management must now certify the accuracy
of financial info.
Question 2:
what are financing activities?
Answer:
-borrowing from creditors ----liabilities are amounts owed to creditors
----note payable (bank loan) ----bonds payable (debt securities) -selling
shares of stock to investors ----common stock(total amount paid in by
stockholders for the shares they purchased) ----dividends (payments to
stockholders)
Question 3:
what are investing activities?
Answer:
-purchase of resources (assets) needed to operate the business -land,
building, equipment, cash, and investments in debt or equity securities of
another company
, Question 4:
what are operating activities?
Answer:
primary activities for which the organization is in business -revenue,
expenses, net income, and net loss
Question 5:
what are creditors?
Answer:
persons or entities to whom the company owes money
Question 6:
what are bonds payable?
Answer:
debt securities sold to investors that must be repaid at a particular date
some years in the future -liability
Question 7:
What is an income statement
Answer:
-report's a company's revenues and expenses and resulting net income
or loss for a specific PERIOD of time
