Intro To Financial Accounting Exam 1 With
Complete Solution
Accounting involves three basic activities - ANSWER Identifies, records, communicates
Who uses Accounting Data - ANSWER External Users: Creditors and Investors
Recent Financial Scandals - ANSWER Enron, WorldCom, HealthSouth, AIG
Sarbanes-Oxley Act of. - ANSWER Added new criminal charges for accounting scandals
Financial Statements - ANSWER Balance Sheet
Income Statement
Statement of Stock Holder's Equity
Statement of Cash Flows
Note Disclosure
Generally Accepted Accounting Principles - ANSWER Standards generally accepted
and universally practiced
Standard Setting Bodies- ANSWER Financial Accounting Standards Board FASB
(SEC)
International Accounting Standards Board
(IASB)
, Historical Cost Principle- ANSWER requires companies to record assets at the cost.
Fair Value Principle- ANSWER holds that assets and liabilities are to be reported at a fair
value
Monetary Unit Assumption - ANSWER companies include in the accounting records only
transaction data expressed in money.
Economic Entity Assumption - ANSWER Requires that activities of the entity be kept
separate and distinct from activities of the owner
Combining activities of Kellogg and General Mills would violate? - ANSWER Economic
Entity Assumption
Corporation - ANSWER Ownership divided into shares of stock
Accounting Equation - ANSWER Assets= Liabilities + Stockholder's Equity
Assets - ANSWER Resources a business owns
Provide future service or benefits
Cash, Supplies, Equipment
Liabilities - ANSWER Claims against assets (Debts and Obligations)
Creditors- Party to whom money is owed
Accounts Payable, Notes Payable
Stockholder's Equity - ANSWER Ownership claim on total Assets
Referred to as residual Equity
Common Stock and Retained Earnings
Complete Solution
Accounting involves three basic activities - ANSWER Identifies, records, communicates
Who uses Accounting Data - ANSWER External Users: Creditors and Investors
Recent Financial Scandals - ANSWER Enron, WorldCom, HealthSouth, AIG
Sarbanes-Oxley Act of. - ANSWER Added new criminal charges for accounting scandals
Financial Statements - ANSWER Balance Sheet
Income Statement
Statement of Stock Holder's Equity
Statement of Cash Flows
Note Disclosure
Generally Accepted Accounting Principles - ANSWER Standards generally accepted
and universally practiced
Standard Setting Bodies- ANSWER Financial Accounting Standards Board FASB
(SEC)
International Accounting Standards Board
(IASB)
, Historical Cost Principle- ANSWER requires companies to record assets at the cost.
Fair Value Principle- ANSWER holds that assets and liabilities are to be reported at a fair
value
Monetary Unit Assumption - ANSWER companies include in the accounting records only
transaction data expressed in money.
Economic Entity Assumption - ANSWER Requires that activities of the entity be kept
separate and distinct from activities of the owner
Combining activities of Kellogg and General Mills would violate? - ANSWER Economic
Entity Assumption
Corporation - ANSWER Ownership divided into shares of stock
Accounting Equation - ANSWER Assets= Liabilities + Stockholder's Equity
Assets - ANSWER Resources a business owns
Provide future service or benefits
Cash, Supplies, Equipment
Liabilities - ANSWER Claims against assets (Debts and Obligations)
Creditors- Party to whom money is owed
Accounts Payable, Notes Payable
Stockholder's Equity - ANSWER Ownership claim on total Assets
Referred to as residual Equity
Common Stock and Retained Earnings
