Financial Accounting: Chapter 1

What are dividends?

a distribution of earnings to stockholders that reduces retained earnings

Expenses generally _____ retained earnings and ____ stockholder’s equity.

decrease; decrease

Purchasing land for cash will…..

increase one asset and decrease another asset with no immediate effect on equity.

Financial accounting primarily provides information for?

external decision makers such as investors and creditors

Which body issues International Financial Reporting Standards (IFRS)?

IASB

Data analytics is what?

the process of examining data, identifying trends, and drawing conclusions

Stockholders’ equity is made up primarily of what?

contributed capital and retained earnings

A CGMA designation signifies what?

Advanced knowledge in finance, operations, strategy, and management

Fair value represents…

the price that would be received if the asset was sold

What is an example of an external decision maker?

lender evaluating a loan

The monetary unit assumption requires items on financial statements to be measured in?

terms of a monetary unit

Corporate earnings are subject to double taxation because?

corporations pay income tax and stockholders pay tax on dividends received

Limited liability of stockholders means?

stockholders are liable only up to their investment in the corporation

The going concern assumption presumes that a business will?

remain in operation for the foreseeable future

Which group elects the board of directors?

stockholders (shareholders)

Compared with the U.S. GAAP, IFRS are generally?

less specific and more principles-based

What is an audit?

an examination of a company’s financial statements and records

What does GAAP stand for?

Generally Accepted Accounting Principles

-the main U.S. accounting rule book

In a corporation ____ is not present for stockholders

mutual agency

Revenues generally ______ retained earnings and _______ stockholders’ equity

increase; increase

What is data visualization?

the presentation of data, trends, and conclusions in a graphical format