Module 3 Flashcards
(15 cards)
Who invests capital in a corporation?
Shareholders
Which ONE of the following is a characteristic of EQUITY financing?
A right to force the business into bankruptcy if dividends are not paid
A right to force the business into bankruptcy if dividends are not paid
A right to force the business into bankruptcy if dividends are not paid
A right to be paid first when the business is terminated
A right to have a say in the affairs of the business
Which of the following financial statements are REQUIRED for companies that adhere to GAAP?
The Statement of Cash Flows, Balance Sheet, and Income Statement
Statement of Cash Flows
The Balance Sheet and the Income Statement
Statement of Retained Earnings
Income Statement
All of these
The Statement of Cash Flows, Balance Sheet, and Income Statement
Ford Motor Company is generally considered to be what kind of business?
Manufacturing business
Which ONE of the following is a characteristic of DEBT financing?
A right to share in any remaining resources when the business is terminated
A right to force the business into bankruptcy if interest is not paid
A right to share in the profits of the business
A right to have a say in the affairs of the business
A right to force the business into bankruptcy if interest is not paid
Which of the following is not an asset? (Choose all that apply) Patents Inventory Capital Stock Retained Earnings
Capital Stock
Retained Earnings
Liabilities on a company’s balance sheet should include not only probable future cash obligations but also any probably future obligations to provide services that can be reasonably quantified.
True
Owners Equity can be defined as (Choose all that apply): The amount of a company's total equity financing Assets - Liabilities (Assets - Liabilities = Owners' Equity) Contributed Capital (or Capital Stock) + Retained Earnings
All the above:
The amount of a company’s total equity financing
Assets - Liabilities (Assets - Liabilities = Owners’ Equity)
Contributed Capital (or Capital Stock) + Retained Earnings
An owner’s contribution/investment of cash into his or her business would
increase the business assets and increase its owner’s equity.
decrease the business liabilities and increase its owner’s equity.
increase the business assets and decrease its liabilities.
none of these.
increase the business assets and increase its owner’s equity.
An owner’s contribution/investment of cash into his or her business would be recorded as revenue to the business.
False
Revenues and expenses affect a company’s owners equity.
True
Which ONE of the following statements BEST describes INVENTORY?
Goods due from customers who have purchased on account
Goods used by company employees on a daily basis
Goods purchased and held for resale
Goods owned or controlled by a company
Goods purchased and held for resale
A capital contribution to a company by its owners…
…increases the company’s liabilities and owner’s equity.
None of these answers
…increases the company’s assets and liabilities.
…has no net effect on the company’s assets.
…increases the company’s assets and decreases owner’s equity.
None of these answers
If potential investors wanted to understand how a company had been financed to date, they would review the company’s
Income Statement
Statement of Cash Flows
Balance Sheet
Statement of Stockholders’ Equity
Balance Sheet
Which ONE of the following statements BEST describes ACCOUNTS PAYABLE?
Obligation arising from the payment of income taxes on account
Obligation arising from the sale of equipment on account
Obligation arising from the borrowing of cash on account
Obligation arising from the purchase of inventory on account
Obligation arising from the sale of office supplies on account
Obligation arising from the purchase of inventory on account
