study questions Flashcards
The professional organization for Certified Public Accountants in the US is the
American Institute of Certified Public Accountants AICPA
T/F company stock values are influenced most significantly by investors’ changing expectations of a company’s future earnings
true
T/F The primary purpose of financial accounting is to communicate information to the managers of a business
False
A disadvantage of the corporate form of business ownership is
possible double income taxation on profits distributed to the company owners
T/F the novo mercado is a Brazilian stock market that has been proposed primarily for the listing of foreign, non-Brazilian stocks in order to make investment in such companies more accessible to Brazilian investors
False
t/f The SEC is considering the allowance of international accounting standards for companies wishing to access US capital markets but such a policy is opposed by the FASB and many US corporations
True
T/F the IASB is a London based organization that has been established to require and enforce the use of international accounting standards in countries receiving funds through the IMF
False
The preparation and accuracy of a company’s financial statements and compliance with GAAP is primarily the responsibility of the company’s
management
t/f stock selling at a low P/E ratio is more characteristic of a growing company than one that has stabilized earnings
false
t/f a sporting goods store in the local mall is an example of a merchandising business
true
t/f an income statement reflects a company’s results from operations for a period of time
true
the classification of assets and liabilities as either currency or long-term is useful to financial statement users because it helps evaluate a company’s
liquidity
t/f 3 general purpose financial statements required under GAAP are the income statement, statement of operations and statement of cash flows
False
What is another name of the income statement?
statement of operations
T/F accounts receivable from reliable and credit worthy customers are not included as assets in a company’s financial statements until actually collected in cash
false
if potential investors wished to clarify how a company had been financed to date, they would review the company’s
balance sheet
T/F The income statement reflects net income, which is equal to revenues minus expenses and dividends
False
financial position refers to
the resources or assets of a business and how those assets have been financed
The transactions of a business are first recorded in
a journal and then posted to the general ledger
A balancing trial balance means that
the total of all debit account balances equals the total of all credit account balances for the company
T/F in a computerized accounting system it is not necessary that the basic accounting equation A=L+OE be maintained in balance
False
The general ledger in an accounting system is used to
summarize the effect of all of a business’ transactions on each account of the business
A credit to the sales revenue account
increases revenues and increases net income
The recording of a cash payment of a utility bill that had not been previously recorded as an expense or a liability would require a debit entry to
an expense account
