Financial Marketing Basics

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Which statement best describes accounting?

The process of distributing financial information to investors

The process of identifying, recording, and summarizing economic information (correct)

The process of making financial decisions

The process of creating financial statements for internal use

Who are the intended users of financial accounting information?

Top executives

Managers

Investors (correct)

Stockholders

Where can you find a company's financial statements in the US?

Balance Sheet

Income Statement

Form 10-K (correct)

Annual report

Which one of these is the correct equation for the balance sheet?

Assets = Liabilities + Owners’ Equity Signup and view all the answers

What are current assets?

Assets that a company expects to be used within one year Signup and view all the answers

What is the purpose of double-entry accounting?

To affect more than two accounts in a transaction Signup and view all the answers

Which term refers to the residual ownership of a corporation?

Common Stock Signup and view all the answers

What is the term for the amount of money that stock is sold for above its par value?

Paid-in Capital Excess of Par-value Signup and view all the answers

What is the term for the set of common measurement principles used to report information on financial statements?

GAAP Signup and view all the answers

What is the term for the third-party that examines information used to prepare financial statements and provides assurances about their credibility?

Auditor Signup and view all the answers

Which one of these is a long-term asset?

Property Signup and view all the answers

Which one of these is an economic obligation of a company?

Long-term debt Signup and view all the answers

Which one of these is the equation for owners' equity?

Total Assets - Total Liabilities Signup and view all the answers

What is the term for a separate economic unit within an organization?

Entity Signup and view all the answers

What is the term for the goods held by a company for the purpose of sale to consumers?

Inventory Signup and view all the answers

What is the term for a liability that results from the purchase of goods or services on open account?

Account payable Signup and view all the answers

What is the term for an asset that states the debt owed by the buyer and the terms of repayment?

Account receivable Signup and view all the answers

What is the term for a transaction that affects more than two accounts?

Compound entry Signup and view all the answers

What is the term for a person or entity to whom the company owes money?

Creditor Signup and view all the answers

What is the term for a business organization created under the State laws of the United States, whose owners have limited liability?

Corporation Signup and view all the answers

Which statement best describes financial accounting?

Financial accounting serves external decision makers. Signup and view all the answers

What is the purpose of an accounting system?

To record financial data and convert them into informative financial statements. Signup and view all the answers

What is the main purpose of the annual report?

To inform external decision makers about the company's past performance and future projections. Signup and view all the answers

Which agency is responsible for dealing with publicly-traded stock in the US?

The Securities and Exchange Commission (SEC) Signup and view all the answers

Which financial statement reports the company's assets, liabilities, and shareholders' equity at a specific point in time?

The Balance Sheet Signup and view all the answers

What is the term for the process of identifying, recording, and summarizing economic information?

Financial accounting Signup and view all the answers

Who are the intended users of management accounting information?

Internal decision makers Signup and view all the answers

What is the term for the set of steps an organization uses to record financial data and convert them into informative financial statements?

Accounting system Signup and view all the answers

What is the term for the company's past performance and future projections?

Annual report Signup and view all the answers

Where can you find a company's financial statements in the US?

Form 10-K Signup and view all the answers

Which term refers to the amount of capital invested by shareholders in a corporation?

Paid-in Capital Signup and view all the answers

What is the term for the amount of money that stock is sold for above its par value?

Paid-in Capital Excess of Par-value Signup and view all the answers

What is the term for the individuals who have a residual ownership of a corporation?

Common Shareholders Signup and view all the answers

What is the term for the top manager of a company elected by the members of the board of directors?

Chief Executive Officer (CEO) Signup and view all the answers

What is the term for the broad concepts and detailed practices followed in preparing and distributing financial statements?

Generally Accepted Accounting Principles (GAAP) Signup and view all the answers

Which institution is responsible for establishing the US GAAP and compiling all standards into one big database called FASB Accounting Standards Codification?

Financial Accounting Standards Board (FASB) Signup and view all the answers

Which institution was established to develop a single set of high-quality, understandable and enforceable global accounting standards?

International Accounting Standards Board (IASB) Signup and view all the answers

What is the term for the services provided by a third-party (public accounting firm) that examines information used to prepare financial statements and provides assurances about their credibility?

Auditor Signup and view all the answers

What is the term for the par-value of the stock purchased by common shareholders of a corporation?

Common Stock Signup and view all the answers

What is the term for the amount of US dollars printed on stock certificates, required by many states?

Par-value Signup and view all the answers

Which one of these is the correct definition of the fiscal year?

The period of time when a company measures income Signup and view all the answers

Which one of these is the correct definition of revenues?

The increase in net assets from the sale of goods and services Signup and view all the answers

Which one of these is the correct definition of expenses?

The decrease in net assets as a result of consuming or giving up resources Signup and view all the answers

Which one of these is the correct definition of income?

The excess of revenues over expenses Signup and view all the answers

Which one of these is the correct definition of retained earnings?

The total cumulative owners' equity generated by income Signup and view all the answers

Which one of these is the correct definition of accounts receivable?

The asset that states the debt owed by the buyer and the terms of repayment Signup and view all the answers

Which one of these is the correct definition of cost of goods sold?

The original acquisition cost of the inventory that a company sells to customers during the reporting period Signup and view all the answers

Which one of these is the correct definition of accrual basis?

Records revenue as it is earned and records expenses as they are incurred Signup and view all the answers

Which one of these is the correct definition of cash basis?

Recognizes revenue when a company receives cash and expenses when it pays cash Signup and view all the answers

Which one of these is the correct definition of revenue recognition criteria?

The criteria used to determine when revenue should be recognized Signup and view all the answers

Which of the following is a requirement for revenues to be recognized under the accrual basis?

Revenues must be earned and realized or realizable Signup and view all the answers

What is the purpose of the matching method in recognizing revenues?

To record expenses in the same time period as revenues Signup and view all the answers

What are period costs?

Expenses linked to the time period itself Signup and view all the answers

What is the net income on an income statement?

The remainder after deducting all expenses from revenues Signup and view all the answers

When expenses exceed revenues, what do we call it?

Net loss Signup and view all the answers

Where are cash dividends recorded in financial statements?

Retained earnings section Signup and view all the answers

What does the Statement of Stockholder's Equity show?

All changes in stockholder's equity accounts Signup and view all the answers

What are the sources of changes in stockholder's equity?

Net income or net loss, transactions with shareholders, and other comprehensive income Signup and view all the answers

What is the purpose of double-entry accounting?

To ensure that every transaction has equal debits and credits Signup and view all the answers

What are current assets?

Assets that are expected to be converted into cash within a year Signup and view all the answers

Which one of these is the correct definition of interim periods?

The periods of time that are less than a year Signup and view all the answers

Which one of these is the correct definition of revenue?

The increase in net assets from the sale of goods and services Signup and view all the answers

Which one of these is the correct definition of expenses?

The decrease in net assets as a result of consuming or giving up resources Signup and view all the answers

Which one of these is the correct definition of income?

The excess of revenues over expenses Signup and view all the answers

Which one of these is the correct definition of retained earnings?

The total cumulative owners' equity generated by income Signup and view all the answers

Which one of these is the correct definition of accounts receivable?

The amount owed to a company by its customers for goods or services sold on credit Signup and view all the answers

Which one of these is the correct definition of cost of goods sold?

The original acquisition cost of the inventory that a company sells to customers Signup and view all the answers

Which one of these is the correct definition of net income?

The remainder after deducting all expenses from revenues Signup and view all the answers

What is the term for the distribution of cash to stockholders?

Cash dividends Signup and view all the answers

Which one of these is the correct definition of the Statement of Stockholder's Equity?

The report of all changes during the year in each stockholder's equity account Signup and view all the answers

What are the sources of changes in stockholder's equity?

Net income or net loss, transactions with shareholders, and other comprehensive income Signup and view all the answers

Where are cash dividends recorded in financial statements?

Statement of stockholder's equity Signup and view all the answers

What is the term for a business organization created under the State laws of the United States, whose owners have limited liability?

Corporation Signup and view all the answers

What is the term for the set of steps an organization uses to record financial data and convert them into informative financial statements?

Accounting system Signup and view all the answers

What is the term for a liability that results from the purchase of goods or services on open account?

Accounts payable Signup and view all the answers

Which one of these is the correct definition of retained earnings?

The total cumulative owners’ equity generated by income Signup and view all the answers

What is the term for the original acquisition cost of the inventory that a company sells to customers during the reporting period?

Cost of goods sold Signup and view all the answers

Which one of these is the correct definition of accrual basis?

Records revenue as it is earned and record expenses as they are incurred Signup and view all the answers

What is the term for the increase in net assets from the sale of goods and services?

Revenue Signup and view all the answers

Which one of these is the correct definition of cash basis?

Recognizes revenue when a company receives cash and expenses when it pays cash Signup and view all the answers

What is the term for the excess of revenues over expenses?

Income Signup and view all the answers

What is the term for the liability that results from the purchase of goods or services on open account?

Accounts payable Signup and view all the answers

What is the purpose of the Income Statement?

To report all revenues and expenses for a specific time period Signup and view all the answers

What is the definition of net income?

The remainder after deducting all expenses from revenues Signup and view all the answers

What is the purpose of the Statement of Stockholder's Equity?

To show all changes in each stockholder's equity account Signup and view all the answers

What are the sources of changes in stockholder's equity?

Net income or net loss, transactions with shareholders, and other comprehensive income Signup and view all the answers

What is the definition of cost of goods sold?

The costs of goods and sales commissions recorded during a sale Signup and view all the answers

What is the definition of accounts receivable?

The amount of debt owed by the buyer and the terms of repayment Signup and view all the answers

What is the definition of accrual basis?

The requirement for revenues to be recognized when they are earned and realized or realizable Signup and view all the answers

Which of the following is a requirement for revenues to be recognized under the accrual basis?

The revenues must be earned and realized or realizable Signup and view all the answers

Financial Marketing Basics

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Questions and Answers

Which statement best describes accounting?

Who are the intended users of financial accounting information?

Where can you find a company's financial statements in the US?

Which one of these is the correct equation for the balance sheet?

What are current assets?

What is the purpose of double-entry accounting?

Which term refers to the residual ownership of a corporation?

What is the term for the amount of money that stock is sold for above its par value?

What is the term for the set of common measurement principles used to report information on financial statements?

What is the term for the third-party that examines information used to prepare financial statements and provides assurances about their credibility?

Which one of these is a long-term asset?

Which one of these is an economic obligation of a company?

Which one of these is the equation for owners' equity?

What is the term for a separate economic unit within an organization?

What is the term for the goods held by a company for the purpose of sale to consumers?

What is the term for a liability that results from the purchase of goods or services on open account?

What is the term for an asset that states the debt owed by the buyer and the terms of repayment?

What is the term for a transaction that affects more than two accounts?

What is the term for a person or entity to whom the company owes money?

What is the term for a business organization created under the State laws of the United States, whose owners have limited liability?

Which statement best describes financial accounting?

What is the purpose of an accounting system?

What is the main purpose of the annual report?

Which agency is responsible for dealing with publicly-traded stock in the US?

Which financial statement reports the company's assets, liabilities, and shareholders' equity at a specific point in time?

What is the term for the process of identifying, recording, and summarizing economic information?

Who are the intended users of management accounting information?

What is the term for the set of steps an organization uses to record financial data and convert them into informative financial statements?

What is the term for the company's past performance and future projections?

Where can you find a company's financial statements in the US?

Which term refers to the amount of capital invested by shareholders in a corporation?

What is the term for the amount of money that stock is sold for above its par value?

What is the term for the individuals who have a residual ownership of a corporation?

What is the term for the top manager of a company elected by the members of the board of directors?

What is the term for the broad concepts and detailed practices followed in preparing and distributing financial statements?

Which institution is responsible for establishing the US GAAP and compiling all standards into one big database called FASB Accounting Standards Codification?

Which institution was established to develop a single set of high-quality, understandable and enforceable global accounting standards?

What is the term for the services provided by a third-party (public accounting firm) that examines information used to prepare financial statements and provides assurances about their credibility?

What is the term for the par-value of the stock purchased by common shareholders of a corporation?

What is the term for the amount of US dollars printed on stock certificates, required by many states?

Which one of these is the correct definition of the fiscal year?

Which one of these is the correct definition of revenues?

Which one of these is the correct definition of expenses?

Which one of these is the correct definition of income?

Which one of these is the correct definition of retained earnings?

Which one of these is the correct definition of accounts receivable?

Which one of these is the correct definition of cost of goods sold?

Which one of these is the correct definition of accrual basis?

Which one of these is the correct definition of cash basis?

Which one of these is the correct definition of revenue recognition criteria?

Which of the following is a requirement for revenues to be recognized under the accrual basis?

What is the purpose of the matching method in recognizing revenues?

What are period costs?

What is the net income on an income statement?

When expenses exceed revenues, what do we call it?

Where are cash dividends recorded in financial statements?

What does the Statement of Stockholder's Equity show?

What are the sources of changes in stockholder's equity?

What is the purpose of double-entry accounting?

What are current assets?

Which one of these is the correct definition of interim periods?

Which one of these is the correct definition of revenue?

Which one of these is the correct definition of expenses?

Which one of these is the correct definition of income?

Which one of these is the correct definition of retained earnings?

Which one of these is the correct definition of accounts receivable?

Which one of these is the correct definition of cost of goods sold?

Which one of these is the correct definition of net income?

What is the term for the distribution of cash to stockholders?

Which one of these is the correct definition of the Statement of Stockholder's Equity?

What are the sources of changes in stockholder's equity?

Where are cash dividends recorded in financial statements?

What is the term for a business organization created under the State laws of the United States, whose owners have limited liability?

What is the term for the set of steps an organization uses to record financial data and convert them into informative financial statements?

What is the term for a liability that results from the purchase of goods or services on open account?

Which one of these is the correct definition of retained earnings?