SI Session 1/21/2010Acct 284Chapter 1Business Decisions and Financial Accounting1. What are the two types of accounting systems?Financial and Managerial2. Who are decision makers for each of these two accounting systems?External (Financial) and Internal(Managerial)3. What are the four financial statements provided by the financial accounting system?1. Balance Sheet2. Income Statement3. Statement of Retained Earning4. Statement of Cash Flows4. What are the four accounting equations used on each of the financial statements above?1. A=L+SE2. NI = Rev - Exp3. End RE=Beg RE + NI- Dividends4. Cash Flow= CF Operating + Investing + Financing5. What is an asset? List 4 different assets that will be seen on a balance sheet.Probable future economic benefits owned by the business as a result of past transactions-cash, inventory, prepaid expenses, short term investments6. What is the most important asset in a company? And what statement is this recorded on? Cash. Balance Sheet7. Net income can be found in the equation of what two financial statements?Income Statement, Statement of Retained Earnings8. What are the two pieces of stockholder’s equity?Contributed Capital, Retained Earnings9. What are the three separate sections on the statement of cash flows?Operating, Investing, Financing10. What financial statement reports financials at a point in time?Balance Sheet11. Which financial statements report for an accounting period as opposed to at a point in time?Income Statement13. What does GAAP stand for?Generally Accepted Accounting Principles14. What are the four qualitative characteristics of accounting information?1. relevance2. reliability3. comparability4. consistencyWhich ones are primary and which ones are secondary?The ones that start with “r” are primary. The ones that start with “c” are secondary15. Who is responsible for the information provided in the financial statements?management16. What was passed in 2002 in response to the accounting fraud involving Enron, WorldCom, Global Crossing, and Xerox?Sarbanes-Oxley Act (SOX)17. What are the 3 types of business entities?1. Sole-proprietorship2. partnership3. corporation18. What is a major disadvantage of a corporation?DOUBLE TAXATION19. What is a major advantage of a corporation?Ability to raise capital, ease of transfer of ownership, limited liability of stockholders20. Matching (M 1-2 from book)_I__ 1. SEC__F_ 2. Investing Activities_D__ 3. Private Company_K__ 4. Corporation_A__ 5. Accounting__C_ 6. Partnership__J_ 7. FASB__G_ 8. Financing activities__B_ 9. Unit of measure__L_ 10. GAAP__H_ 11. Operating ActivitiesA. a system that collects and processes financial information about an organization and reports that information to decision makers.B. Measurement of information about a business in the monetary unit C. An unincorporated business owned by two or more personsD. A company that sells shares of its stock privately and is not required to release its financial statements to the publicF. Buying and selling productive resources with long lives(investing in equipment)G. Transactions with lenders and stockholdersH. Activities directly related to running the business to earn profitI. Has power to determine rules, determines financial statementsJ. Sets the rules for AccountingK. A company that has its stock bought and sold by investors on established stock exchangesL. Generally accepted accounting principles21. Match each item to their respective statements. Also, classify each item as an asset, liability, SE, revenue or expense when possible.BS L_ Wages Payable BS A_ Accounts receivableBS SE_ Contributed Capital BS A_ Prepaid insuranceIS E_ Cost of goods sold BS SE Retained earningsIS R_ Sales of $50,000 SCF ___ Financing Activities (bank loan)BS A_ Inventory BS R_ Rent RevenueExercise E1-3 BookDSW is a designer shoe warehouse, selling some of the most luxurious and fashionable shoes at prices that people can actually afford. Its year-end balance sheet, at January 28, 2006, contained the following items (in thousands).Accounts Payable: $85,820 Other liabilities: $53769Accounts Receivable: $4,088 Property Plant & Equipment: $95921Cash: $124,759 Retained Earnings: $26,007Contributed Captial: $278,709 Total Assets: ?Notes Payable: $63410 Total Stockholders Equity: ?Other Assets: $2829471. Prepare the Balance Sheet Solving for the missing
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