Accounting 201- Exam 1 Questions And CORRECT Answers
a balance sheet that groups together similar assets and similar liabilities, using a number of standard
classifications and sections - ✔✔ classified balance sheet
a business organized as a separate legal entity owned by stockholders - ✔✔ corporation
a business owned by one person - ✔✔ sole proprietorship
a business owned by two or more persons associated as partners - ✔✔ partnership
a financial statement that provides financial information about the cash receipts and cash payments
of a business for a specific period of time - ✔✔ statement of cash flows
a financial statement that reports a company's revenues and expenses and resulting net income or
net loss for a specific period of time - ✔✔ income statement
a financial statement that reports the assets and claims to those assets at a specific point in time -
✔✔ balance sheet
a financial statement that summarizes the amounts and causes of changes in retained earnings for a
specific time period - ✔✔ retained earnings statement
a measure of liquidity computed as current assets divided by current liabilities - ✔✔ current ratio
a measure of solvency calculated as total liabilities divided by total assets. it measures the percentage
of total financing provided by creditors - ✔✔ debt to assets ratio
a measure of the net income earned on each share of common stock; computed as net income minus
preferred dividends divided by the weighted-average number of common shares outstanding during
the year - ✔✔ earnings per share (EPS)
, a report prepared by an independent outside auditor stating the auditor's opinion as to the fairness of
the presentation of the financial position and results of operations and their conformance with
generally accepted accounting principles - ✔✔ auditor's report
a report prepared by corporate management that presents financial information including financial
statements, a management discussion and analysis section, notes, and an independent auditor's
report - ✔✔ annual report
a section of the annual report that presents management's views on the company's ability to pay
near-term obligations, its ability to fund operations and expansion, and its results of operations - ✔✔
management discussion and analysis (MD&A)
a set of accounting standards that have substantial authoritative support and which guide accounting
professionals - ✔✔ generally accepted accounting principles (GAAP)
a technique that expresses the relationship among selected items of financial statement data - ✔✔
ratio analysis
ability to compare the accounting information of different companies because they use the same
accounting principles - ✔✔ comparability
accounting principle that dictates that companies disclose circumstances and events that make a
difference to financial statement users - ✔✔ full disclosure principle
accounting standards, issued by the IASB, that have been adopted by many countries outside of the
United States - ✔✔ International Financial Reporting Standards (IFRS)
amounts owed to creditors in the form of debts and other obligations - ✔✔ liabilities
an accounting principle that states that companies should record assets at their cost - ✔✔ historical
cost principle
a balance sheet that groups together similar assets and similar liabilities, using a number of standard
classifications and sections - ✔✔ classified balance sheet
a business organized as a separate legal entity owned by stockholders - ✔✔ corporation
a business owned by one person - ✔✔ sole proprietorship
a business owned by two or more persons associated as partners - ✔✔ partnership
a financial statement that provides financial information about the cash receipts and cash payments
of a business for a specific period of time - ✔✔ statement of cash flows
a financial statement that reports a company's revenues and expenses and resulting net income or
net loss for a specific period of time - ✔✔ income statement
a financial statement that reports the assets and claims to those assets at a specific point in time -
✔✔ balance sheet
a financial statement that summarizes the amounts and causes of changes in retained earnings for a
specific time period - ✔✔ retained earnings statement
a measure of liquidity computed as current assets divided by current liabilities - ✔✔ current ratio
a measure of solvency calculated as total liabilities divided by total assets. it measures the percentage
of total financing provided by creditors - ✔✔ debt to assets ratio
a measure of the net income earned on each share of common stock; computed as net income minus
preferred dividends divided by the weighted-average number of common shares outstanding during
the year - ✔✔ earnings per share (EPS)
, a report prepared by an independent outside auditor stating the auditor's opinion as to the fairness of
the presentation of the financial position and results of operations and their conformance with
generally accepted accounting principles - ✔✔ auditor's report
a report prepared by corporate management that presents financial information including financial
statements, a management discussion and analysis section, notes, and an independent auditor's
report - ✔✔ annual report
a section of the annual report that presents management's views on the company's ability to pay
near-term obligations, its ability to fund operations and expansion, and its results of operations - ✔✔
management discussion and analysis (MD&A)
a set of accounting standards that have substantial authoritative support and which guide accounting
professionals - ✔✔ generally accepted accounting principles (GAAP)
a technique that expresses the relationship among selected items of financial statement data - ✔✔
ratio analysis
ability to compare the accounting information of different companies because they use the same
accounting principles - ✔✔ comparability
accounting principle that dictates that companies disclose circumstances and events that make a
difference to financial statement users - ✔✔ full disclosure principle
accounting standards, issued by the IASB, that have been adopted by many countries outside of the
United States - ✔✔ International Financial Reporting Standards (IFRS)
amounts owed to creditors in the form of debts and other obligations - ✔✔ liabilities
an accounting principle that states that companies should record assets at their cost - ✔✔ historical
cost principle
