CHAPTER 11) What is a system that collects and processes financial information about an organization and reports that information to decision makers?a) Accountingb) Accountingc) Accountingd) Umm..All of the above2) Financial Accounting statements are for(circle one): internal users external usersa) Objective: To provide useful economic information to external parties for decision making and for assessing future cash flows3) The basic accounting equation is :a) Assets=Liabilities +Contributed Capitalb) NI=Revenues-Expensesc) Assets= Liabilities + Stockholders Equity4) A resource controlled by the company that has measureable value and a is expected to provide future benefits for the comapy is a(n):a) Liabilityb) Expensec) Revenued) Asset5) Fill in the Blanksa) Net Income = Revenues-Expenses__b) End Retained Earnings=_Beg RE___+__NI___--__Dividends____c) CF from Operations + CF from Investing + CF from Financing = Change in Cash (pg 15) + Beginning Cash Balance-Cash Collected -Cash paid for -Cash borrowed Ending Cash BalanceFrom Customers PPE from banks-Cash paid to -Cash received from selling stockSuppliers6) Which financial statement shows the financial position of a business as of a given date?a) Balance sheetb) Income statementc) Statement of cash flowsd) Statement of Retained Earnings7) Who has the power to determine rules?a) SECb) CESc) FASBd) PCAOB8) Who is the ACTUAL rule setting body?a) SECb) CESc) FASBd) PCAOB9) Who approves the rules?a) SECb) CESc) FASBd) PCAOB10) GAAP stands for Generally Accepted Accounting Principles11) Know the qualitative characteristics of accountinga) Relevance-it helps in making decisionsb) Reliability-it is unbiased and verifiablec) Comparability-comparable to other companiesd) Consistency-over time, the company uses the same techniques/methods12) Who is primarily responsible for the accuracy of the financial statements?a) Managementb) Ac) A & Bd) All of the above13) Sarbanes Oxley Act of 2002= SOX14) Sole proprietorship-business owned by one individual15) Partnership-two or more owners16) Corporation-separate entity from both a legal and accounting perspectivea) Double Taxation is the biggest disadvantageCHAPTER 217) What lists all account names and corresponding account numbers used in an accounting systema) Chart of Accountsb) Chartc) Account Chartd) Not this one18) What does it mean if an asset is classified as Current:a) It will be used up within a yearb) I don’t like making multiple choice questionsc) Just pick A19) What does it mean if a liability is classified as Current:a) It will be paid for within a year20) What requires assets to be recorded at the cash-equivalent cost at the date of transaction?a) Cost Principleb) Historic Cost Principlec) Both A & B are correct21) All events are transactionsa) Trueb) False not all events are transactions but all transactions are the result of past events22) What are the two rules of a transaction?a) Every transaction affects at least two accountsb) The accounting equation must remain in balanceTRANSACTIONS:A Company issues stock in exchange of $50,000Assets = Liabilities + Stockholder equityCash + 50000= CC +50,000A company pays $42,000 cash for equipmentAssets = Liabilities + Stockholder equityEquipment+42,000Cash-42,000A company borrows $20,000 from a bankAssets = Liabilities + Stockholder equityCash = N/P + 20,000+20,000A company buys equipment for $18,000. They paid for the equipment with $16,000 cash and promised to pay $2,000 by the end of the monthAssets = Liabilities + Stockholder equityEquipment= N/P +2,000+18,000Cash-16,000A company orders supplies for $100No transactionAssets = Liabilities + Stockholder equityJOURNALIZE A Company issues stock in exchange of $50,000Cash 50,000 Contributed Capital 50,000A company pays $42,000 cash for equipmentEquipment 42,000 Cash 42,000A company borrows $20,000 from a bankCash 20,000 N/P 20,000A company buys equipment for $18,000. They paid for the equipment with $16,000 cash and promised to pay $2,000 by the end of the monthEquipment 18,000 Cash 16,000 N/P 2,000A company orders supplies for $100POST TO LEDGER Cash Accounts Payable Equipment Contributed CapitalCHAPTER 3 ( use pg 104 if you are confused when to record an expense/revenue )*Remember that you don’t recognize any revenue until it is EARNED*Remember that you don’t recognize any expense until it is INCURREDDeferred At point ofsale/paymentAccruedExpense -This means cash is paid before cost is incurredEX: Prepaid Exp $xxx Cash $xxx -This means cash is paid when expense was incurredEX: Expense $xxx Cash $xxx -This means cash will be paid at a later date after the cost is already incurredEX:Expense $xxx Payable $xxxRevenue -This means cash was received before the revenue was earnedEX:Cash $xxx Unearned Rev $xxx-This means cash was received when the revenue was earnedEX:Cash $xxx Sales Revenue $xxx-This means cash won’t be received until after the revenue was earnedEX:A/R $xxx Sales Revenue