Financial Accounting Exam 1 - Chapters 1-3
Questions And Answers
Corporation A business organized as a separate legal entity owned by stockholders
Income Statement Reports a company's revenues and expenses and resulting net income
or loss for a specific period of time
Liabilities Amounts owed to creditors in the form of debts and other obligations
Management Discussion and Analysis (MD&A) A section of the annual report that
presents management views on the company's ability to pay near-term obligations, its ability to
fund operations and expansion, and its results of operations
Partnership A business owned by 2 or more persons associated as partners
Retained Earnings The amount of net income retained in the corporation
Retained Earnings Statement Beg. R/E Balance + Net income/loss - Dividends = Ending
R/E
, Financial Accounting Exam 1 - Chapters 1-3
Questions And Answers
Sarbanes-Oaxley Act (SOX) Regulations passed by Congress to reduce unethical
corporate behavior
Sole Proprietorship A business owned by one person
Statement of Cash Flows Cash flows from operating activities - Cash flows from investing
activities + Cash Flows from financing activities = Net Increase in Cash + Cash at beginning of
Period = Cash at end of period
Consistency Use of the same accounting principles and methods from year to year within
a company
Cost Constraint Constraint that weighs the cost that companies will incur to provide the
info. against the benefit that financial statement users will gain from having the info. available
Current Ratio A measure of liquidity : current assets/current liabilities
Questions And Answers
Corporation A business organized as a separate legal entity owned by stockholders
Income Statement Reports a company's revenues and expenses and resulting net income
or loss for a specific period of time
Liabilities Amounts owed to creditors in the form of debts and other obligations
Management Discussion and Analysis (MD&A) A section of the annual report that
presents management views on the company's ability to pay near-term obligations, its ability to
fund operations and expansion, and its results of operations
Partnership A business owned by 2 or more persons associated as partners
Retained Earnings The amount of net income retained in the corporation
Retained Earnings Statement Beg. R/E Balance + Net income/loss - Dividends = Ending
R/E
, Financial Accounting Exam 1 - Chapters 1-3
Questions And Answers
Sarbanes-Oaxley Act (SOX) Regulations passed by Congress to reduce unethical
corporate behavior
Sole Proprietorship A business owned by one person
Statement of Cash Flows Cash flows from operating activities - Cash flows from investing
activities + Cash Flows from financing activities = Net Increase in Cash + Cash at beginning of
Period = Cash at end of period
Consistency Use of the same accounting principles and methods from year to year within
a company
Cost Constraint Constraint that weighs the cost that companies will incur to provide the
info. against the benefit that financial statement users will gain from having the info. available
Current Ratio A measure of liquidity : current assets/current liabilities
