Principles of Financial Accounting Exam 1
Questions And Answers
Where do financing funds come from? Either issuing (selling) stock of borrowing money.
Creditor The person to whom the corporation owes money.
Liability The obligation to repay a creditor.
Stockholders' Equity Claims of the stockholders.
Investing Activites The purchase (and sale) of the assets that are used in operations
(commonly referred to as property,plant, and equipment) are a corporation's investing activities.
Operating Activities Operating through use of goods or services that generate revenue and
expenses.
Revenue the increase in assets (cash or receivable) that results from the sale of products or
services.
, Principles of Financial Accounting Exam 1
Questions And Answers
Expenses the cost of assets used or the liabilities created, in the operation of the business
Net income revenues are greater than expenses
Net loss expenses are greater than revenues
List the four types of financial statements Balance sheet, retained earnings, income
statement, cash flow
Balance sheet Reports the resources owned by a company (assets) and the claims against
those resources (liabilities and stockholders' equity) at a specific point in time.
Income statement Reports how well a company has performed its operations (revenues,
expenses, and net income/loss) over a period of time
Retained earnings statement Reports how much of the company's income was retained in
the business and how much was distributed to owners over a period of time
Questions And Answers
Where do financing funds come from? Either issuing (selling) stock of borrowing money.
Creditor The person to whom the corporation owes money.
Liability The obligation to repay a creditor.
Stockholders' Equity Claims of the stockholders.
Investing Activites The purchase (and sale) of the assets that are used in operations
(commonly referred to as property,plant, and equipment) are a corporation's investing activities.
Operating Activities Operating through use of goods or services that generate revenue and
expenses.
Revenue the increase in assets (cash or receivable) that results from the sale of products or
services.
, Principles of Financial Accounting Exam 1
Questions And Answers
Expenses the cost of assets used or the liabilities created, in the operation of the business
Net income revenues are greater than expenses
Net loss expenses are greater than revenues
List the four types of financial statements Balance sheet, retained earnings, income
statement, cash flow
Balance sheet Reports the resources owned by a company (assets) and the claims against
those resources (liabilities and stockholders' equity) at a specific point in time.
Income statement Reports how well a company has performed its operations (revenues,
expenses, and net income/loss) over a period of time
Retained earnings statement Reports how much of the company's income was retained in
the business and how much was distributed to owners over a period of time
