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Exam 1: A Framework for Financial Accounting

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Question 21

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Financial accounting and reporting standards in the United States are established primarily by the:

A) Securities and Exchange Commission.
B) Financial Accounting Standards Board.
C) International Accounting Standards Board.

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

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Question 22

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The statement of stockholders' equity is a financial statement that summarizes the changes in stockholders' equity over an interval of time.

A) True
B) False

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Question 23

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Retained earnings represents the cumulative amount of net income,over the life of the company,that has not been distributed to stockholders as dividends.

The independent,private-sector group that is primarily responsible for setting financial reporting standards in the United States is the:

The assumption that the life of the business can be divided into time intervals for reporting purposes is the:

The 1933 Securities Act and the 1934 Securities Exchange Act were designed to restore investor confidence in financial accounting following the stock market crash in 1929.

Given the information below about David Corporation,what was the amount of dividends the company paid in the current period?

Operating cash flows generally include cash transactions for the purchase and sale of investments and long-term assets.These are investing activities.

Investing activities include the purchase and sale of long-term resources.

Liabilities are best defined as:

The accounting equation shows that a company's resources equal creditors' and owners' claims to those resources.

Materiality is based upon which factor(s) ?

The two primary components of stockholders' equity include common stock and revenue.The two components of stockholders' equity include common stock and retained earnings.

The ending Retained Earnings balance of Boomer Inc.decreased by $1.0 million from the beginning of the year.The company declared a dividend of $5.4 million during the year.What was the net income for the year?

Transactions of a company that include the purchase and sale of long-term assets are referred to as:

If a company has gone bankrupt,its financial statements likely violate the:

Financing activities are transactions involving externals sources of funding.

Public accounting firms are professional service firms that traditionally have focused on three areas: auditing,tax preparation/planning,and business consulting.

Which statement below best describes the accounting equation?

On January 1,Gucci Brothers Inc.started the year with a $492,000 balance in Retained Earnings and a $605,000 balance in Common Stock.During the year,the company reported net income of $92,000,paid a dividend of $15,200,and issued more common stock for $27,500.What is total stockholders' equity at the end of the year?