SOLUTION MANUAL FOR FINANCIAL
ACCOUNTING FINAL PAPER QUESTIONS
ANSWERS COMPLETE SOLUTION VIEW
AHEAD SUCCESS STRATEGY
●● Primary users of financial accounting information
Answer: Investors and creditors.
●● Income statement
Answer: Reports revenues minus expenses to determine net income over
a period of time.
●● Balance sheet
Answer: Reports assets, liabilities, and stockholders' equity at a specific
date.
●● Statement of cash flows
Answer: Reports cash inflows and outflows from operating, investing,
and financing activities.
●● Retained earnings formula
Answer: Beginning RE + Net Income − Dividends = Ending RE.
, ●● Basic accounting equation
Answer: Assets = Liabilities + Stockholders' Equity.
●● Expanded accounting equation
Answer: Assets = Liabilities + Common Stock + Retained Earnings.
●● Effect of dividends on equity
Answer: Dividends decrease retained earnings but are not expenses.
●● FASB
Answer: Creates accounting standards (GAAP) in the U.S.
●● SEC
Answer: Regulates public companies and enforces financial reporting
rules.
●● GAAP
Answer: Generally Accepted Accounting Principles; rules for financial
reporting.
●● Who prepares financial statements?
Answer: Management.
ACCOUNTING FINAL PAPER QUESTIONS
ANSWERS COMPLETE SOLUTION VIEW
AHEAD SUCCESS STRATEGY
●● Primary users of financial accounting information
Answer: Investors and creditors.
●● Income statement
Answer: Reports revenues minus expenses to determine net income over
a period of time.
●● Balance sheet
Answer: Reports assets, liabilities, and stockholders' equity at a specific
date.
●● Statement of cash flows
Answer: Reports cash inflows and outflows from operating, investing,
and financing activities.
●● Retained earnings formula
Answer: Beginning RE + Net Income − Dividends = Ending RE.
, ●● Basic accounting equation
Answer: Assets = Liabilities + Stockholders' Equity.
●● Expanded accounting equation
Answer: Assets = Liabilities + Common Stock + Retained Earnings.
●● Effect of dividends on equity
Answer: Dividends decrease retained earnings but are not expenses.
●● FASB
Answer: Creates accounting standards (GAAP) in the U.S.
●● SEC
Answer: Regulates public companies and enforces financial reporting
rules.
●● GAAP
Answer: Generally Accepted Accounting Principles; rules for financial
reporting.
●● Who prepares financial statements?
Answer: Management.
