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Exam 1: A Framework for Financial Accounting

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Question 1

Multiple Choice

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FlintCo purchases additional office equipment to better serves its customers.This cash purchase is reported in the statement of cash flows as what type of activity?

A) Company activity.
B) Investing activity.
C) Financing activity.

D) A) and B)
E) B) and C)

Correct Answer

verified

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Question 2

Multiple Choice

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Which of the following accounts appears in the statement of stockholders' equity?

A) Accounts Payable.
B) Accounts Receivable.
C) Common Stock.

D) B) and C)
E) All of the above

Correct Answer

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C

Question 3

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Investors and creditors rely heavily on financial accounting information in making investment and lending decisions.

Fundamental qualitative characteristics of accounting information are:

Expenses are regular cash payments by a corporation to its stockholders.Dividends are payments to stockholders.

If total change in cash = $44,000,net operating cash flows = $22,000,and net investing cash flows = ($13,000) ;then net financing cash flows =

Which of the following best describes revenue?

The Financial Accounting Standards Board's conceptual framework does not prescribe Generally Accepted Accounting Principles.It provides an underlying foundation for the development of accounting standards and interpretation of accounting information.

The accounts that represent resources owed to creditors are called:

Financing cash flows in the statement of cash flows would include which of the following?

Transactions related to the primary business activities of the company,such as selling goods and services to customers,are referred to as:

Financial accounting has an impact on everyday business decisions as well as wide-ranging economic consequences.

Which of the following is the correct order for preparing the financial statements listed?

For the past five years,Mookie Consulting Services reported the following annual net income and dividend amounts: If Mookie had Retained Earnings of $88,000 at the end of year 5,what was the company's Retained Earnings at the beginning of Year 1? $\begin{array} { | l | r | r | } \hline \text { Year } & \text { Net Income } & \text { Dividends } \\\hline 1 & \$ 22,000 & \$ 2,000 \\\hline 2 & 17,000 & 2,000 \\\hline 3 & 9,000 & 1,000 \\\hline 4 & 14,000 & 3,000 \\\hline 5 & 25,000 & 4,000 \\\hline\end{array}$

Which of the following best represents value created for stockholders during the current period?

All cash transactions reported in the statement of cash flows are classified as (1)operating activities, (2)investing activities,or (3)financing activities.

Which of the following items is reported in the statement of stockholders' equity?

For accounting information to be relevant,it should possess which of the following characteristics?

Accounting is a system of maintaining records of a company's operations and communicating that information to decision makers.

Accounting information is used by creditors to decide whether to invest in a company's stock.Creditors lend money to a company.